Bank of England

UK leaves the EU after nearly 50 years of membership

3rd February 2020 Market Update

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?? GBP – The pound performed well on Friday rallying nearly 1% against USD. 31st January 2020 was officially Brexit day and the UK now enters the transition period with the EU. Boris Johnson has ambitiously confirmed he wants the transition period to come to an end by the start of 2021.

The UK Cabinet have signalled they may be unwilling to be flexible on negotiations with Dominic Raab over the weekend stating they will not align with any EU rules in a post Brexit trade deal. Sterling has weakened this morning as this news filtered into the market.

Today Boris Johnson is due to speak to set out his vision for Brexit and at 9.30am UK Manufacturing PMI for January is released, the forecasted figure is the same as December’s reading of 49.8.

?? EUR – The Euro started Friday morning negatively with the German Retail Sales monthly figure dropping 3.3% in December, far worse than the 0.5% forecasted drop. The annual figure rose 0.8%, again a lot lower than the 5% expected rise.

Eurozone Preliminary CPI annual figure met it’s expected figure of 1.4%. The Core figure just missed its estimated 1.2%, released at 1.1%. EU Annual and Quarterly preliminary GDP both missed expectations by 0.1%, released at 1% and 0.1% respectively.

EUR made a strong recovery later on Friday against USD finishing its longest losing streak since November 2018.

Today the EU’s chief Brexit negotiator, Michael Barnier, will respond to Boris Johnson’s Brexit vision. French President, Emmanuel Macron, took a negative tone against the UK’s departure from the EU stating Brexit was based on “lies, exaggerations and cheques that will never come”. He went onto say France will defend its Fishing and Agricultural industries. At 9am EU Manufacturing PMI for January is released, the forecasted figure is the same as December’s reading of 47.8 and ECB President, Christine Lagarde, is speaking in Germany at 6pm.

?? USD – EUR/USD rise on Friday afternoon was aided by USD weakness. The Dow Jones fell 1.4%, the Nasdaq fell 1.05% and the US 10-year yield is at a 3 month low at 1.52%.

Today at 2.45pm US Manufacturing PMI for January is released, the forecasted figure is the same as December’s reading of 51.7. At 3pm ISM Manufacturing PMI for January is released, it is forecasted at 48.5 after last months reading of 47.2.

 

Summary:

GBP: PM sets out Brexit vision today
EUR: EUR/USD finishes its longest losing streak in 14 months
USD: USD weakens with US Stock markets

 

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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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