houses of parliaments

When Corbyn met May

3rd April 2019 Market Update

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🇬🇧 GBP –  Sterling gained 0.8% since yesterdays opening and has continued to do today after optimism that a cross party agreement may well break the Brexit impasse. The PM said yesterday she planned to ask the EU for a further extension to Article 50 but not to be beyond May 22nd. Sterling moved higher initially after this but really pushed on after Theresa May announced that she will meet Jeremy Corbyn to discuss a cross party agreement for a Brexit deal. Another cross-party group of MPs are attempting to push through legislation to stop a no-deal Brexit also.

UK Construction data disappointed by failing to match market expectations but the data had little effect on the pound.

Today, whilst we are expecting Services PMIs in the morning, all eyes and ears will be tuned into any announcement made after the meeting between Corbyn and May and this will be the deciding factors on moves on the pound.

Sterling is now near the top end of its current trading range and any breakout of this looks likely to only happen should a Brexit deal be agreed. Against the dollar, the pound is midway through its range and could well test the highs based on its current run.

🇪🇺 EUR – Spanish unemployment came in above expectations yesterday, however this had minimal impact on the euro. Furthermore, PPI followed, and came in slightly worse than analysts expected at 0.1%. Following Theresa May’s speech yesterday, it came out that the EU is intending to offer the UK a long Brexit delay with strict conditions attached. These will include the need to hold European Parliament elections.

Lately there has been concerning economic data out from Europe, such as manufacturing data being below expectations. However, this morning there has been better than expected services PMI out from across Europe. This included strong data from Spain, Italy, France and Germany – giving the euro a small boost this morning.

🇺🇸 USD –  Dollar gains were halted yesterday after durable goods orders came in much lower than expected which adds to the recent poor data on the consumption growth in the US suggesting that people are just not spending. With regards to recent talks over a trade deal between the US and China, the Financial Times has reported this morning that the deal is 90% complete adding to positive market sentiment and thus risk appetite.

The dollar demise has continued into today ahead of ADP job figures in the afternoon forecasted to show only 170,000 jobs were added in March down from 183,000 added in February. Markit Services PMI figures are due for release also.

 

Summary:
GBP: Cross Party Talks Push Sterling Higher
EUR: Services PMIs in focus today
USD: Dollar Weakens on Weaker Durable Goods Orders

 

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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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