May Seeks Extension to 30 June

5th April 2019 Market Update

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🇬🇧 GBP –  Sterling was sold off yesterday with gains from Tuesday and Wednesday erased in what looks like profit taking by the markets in the absence of any further developments with Brexit.

Talks between May and Corbyn will resume today after four and a half hours of detailed discussions on Thursday with both leaders facing pressure from their own parties about the possibility of a public vote on a deal.

Theresa May this morning has written an official request to extend Brexit until 30 June 2019. This counters Donald Tusk’s comments yesterday that he may well offer the UK a one-year extension with the flexibility to leave early.

Sterling’s next move thus looks likely to be dictated by what the EU’s response will be to Mrs May.

In the longer term, a Reuters poll has suggested that should the Brexit deadlock be resolved then we could see the pound rally by 3% but should Britain leave the EU without a deal then we could see a 5% fall on the currency. Thus risk on the pound is higher than the potential reward.

🇪🇺 EUR – The euro suffered yesterday erasing half of the gains it made against the dollar on Wednesday. The weakness seems to have stemmed following the disappointing factory orders figures yesterday morning.

No data out today with moves on the euro likely to be subdued.

🇺🇸 USD –  Dollar demand was up again yesterday following the selloff in the euro. The moves come ahead of the all-important job print this afternoon with the nonfarm payroll (NFP) print expected to show 180,000 jobs were added in March, wage growth expected to remain at 3.4% and the unemployment rate expected to remain at 3.8%. The ADP print on Wednesday, which came in lower than forecast could well point to a poor NFP set of data today which could well see the dollar sell off.

 

Summary:
GBP: May-Corbyn continue talks following extension request
EUR: Currency sells off as Germany disappoints again
USD: Job data in focus today

 

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Darren Kilner

Darren Kilner

Darren is Head of Dealing at FairFX. Darren lives and breaths FX, his Mastermind topics are G8 currencies and economic forecasts.

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