2nd April 2019 Market Update
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🇬🇧 GBP – Another vote and another disappointment with MPs unable to agree to the indicative votes yesterday evening. The four options on the table were for a Common Market 2.0, a customs union with the EU, a confirmatory public vote and parliamentary supremacy; all of which were unequivocally voted down in the commons last night causing sterling to lose the gains it made yesterday. The pound currently sits near its one month low.
On the data front manufacturing PMIs came in at a 13-month high as factories in Britain stockpiled ahead of the initial Article 50 deadline. The figure far exceeded market expectations causing the pound to soar high before dropping down following last nights disappointment.
So, what next for Brexit? Theresa May will host a cabinet meeting from 9am today to discuss next steps. Three options being touted now appear to be the PMs deal, no deal, or an election so unsurprisingly causing investors to be wary of the prospect of the pound today. Key things to look out for today will be if Theresa brings about another meaningful vote on her deal and if that fails whether a general election is the only way to break the impasse.
On the data front, UK construction PMIs are due out today which are expected to improve slightly but still say in stagnation.
🇪🇺 EUR – Brexit worries clearly seem to be having some effect in the Eurozone with manufacturing PMI contracting to its lowest in six years amid decline in demand and production. A similar figure was also seen from Germany, the driving force for the single-bloc. Whilst the unemployment rate in the region remained at 7.8%, inflation dropped to 0.8% from 1% which follows the trend from Germany last week and supports the current ECB stance that more monetary policy may be needed and thus rate cut is more likely than a hike.
No data out today which will probably help the currency following the recent string of very disappointing data. The euro currently sits near its lowest levels since July 2017.
🇺🇸 USD – Manufacturing PMIs were mixed yesterday with data agency Markit reporting a minor downturn in the sector and ISM reporting an uptick. Demand for the dollar remained as a result but this still seems primarily because of outflows out of the euro into the safety of the dollar.
Durable goods orders out today which look likely to drop off for the month of March. This follows on from the recent data suggesting that consumption growth and personal spending in the US has reduced over the first quarter. However, it does seem unlikely that the fall in these orders will have an adverse impact on the dollar given current investor sentiment on the currency
GBP: Theresa May Heads Cabinet Meeting today
EUR: Manufacturing now at lowest level in six years
USD: Amid global uncertainly, investors seek dollar
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