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Soft Brexit to Split Tories

1st April 2019 Market Update

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🇬🇧 GBP –  Brexit uncertainty dominated sterling moves throughout March with the currency trading on average in a 3% range against most of its counterparts. Last week we saw no clear conclusion on the first round on indicative votes on an alternative Brexit as well as Theresa May’s withdrawal agreement being voted down on Friday. On the data front fourth quarter growth figures were revised marginally higher to 1.4%.

Over the weekend the justice secretary, David Gauke, told the BBC’s Andrew Marr show that the PM will have to consider a softer Brexit or even a longer extension of article 50, should parliament will it. However this could well cause a wide rift within the Tory party as cabinet ministers in both remain and leave camps have threatened to leave should Mrs May consider this.

Sterling has started marginally higher this week following the sell off on Friday. Today we’ll have the manufacturing PMI’s out at 9.30am expected to come in slightly higher at 53 fin March and in the evening, we’ll see another round of indicative votes on Brexit alternatives.

🇪🇺 EUR – The euro continued to fall against the US dollar last week following a series of negative data from Germany supporting the recent comments and concerns by the European Central Bank about growth and inflation in the eurozone.

This week manufacturing and services PMI’s will be in focus, with any uptick sure to allow the euro a bounce back against its month-long negative sentiment. Inflation figures will be out from Europe today expected to remain at 1.5% in March.

🇺🇸 USD –  DData on Friday showed personal spending and expenditures dropped in January supporting to worries last week that consumption growth in the US seems to be dwindling. Despite this and the downward revision of growth seen last week, the dollar continued its two-month positive run with the dollar index finishing March approximately 1% higher.

The economic data docket is full this week. Today sees the latest retail sales report as well as manufacturing PMI’s and later in the week we see the durable goods orders and services PMIs.

 

Summary:
GBP: MPs set to vote on second round of indicative votes
EUR: Euro still on the demise due to low German inflation
USD: Growth slows down but demand for dollar still there

 

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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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