A Brexit breakthrough?
21 February, 2018
Yesterday, despite almost no data releases from the UK, the pound climbed over half a cent against the euro, in large part no doubt due to the news that the European Parliament is preparing a 60 page document detailing how it will give the UK more flexibility in future negotiation talks, possibly handing the UK “privileged” access to the single market. This resolution, surprisingly, is in stark contrast to the position maintained by the EU’s chief Brexit negotiator Michel Barnier. There are currently plans the put the resolution to the EU’s Brexit team on 8th March.
The positive movement for the pound was despite German PPI inflation and economic sentiment, and it’s European counterpart, coming in above expectation. Later in the day, preliminary consumer confidence from the EU suggests spending power on the continent has dropped substantially, coming in at a tenth of the expected level at 0.1.
Today is a huge day for data releases and eco stats, with much movement in the rates anticipated. At the time of writing, we are soon to have the ECB’s non-monetary policy meeting at 8 am, UK time. Markit PMI inflation is also due from Germany and Europe. From the UK, at 9:30 am, we have average earnings, unemployment and claimant count change as well as public sector net borrowing. Later this afternoon, between 2 pm and 3 pm, we have the Harker speech from the FOMC, BoE governor Mark Carney speaking (which always causes volatility between £-€), inflation report hearings (which may have a large bearing on further interest rate hikes, and almost certainly have a large impact on the strength of GBP) MPC members Broadbent, Haldane and Tenreyro are also all due to give press conferences. Rounding off the UK day are Markit services PMI and existing home sales. Later in the evening, we have the FOMC minutes, with further updates on US interest hike policy.
All in all, a lot of potentials to help or hinder GBP today. Rates are from GBP, as of 8 am, the highest they have been in nearly two weeks. If you are not typically known as a gambler, it is wise to book your currency in sooner rather than later. Why wait? Since Valentine’s Day lows, we have seen an increase of over a cent-and-a-half against the euro, meaning a €200k property costs you £2300 less; not bad money for a weeks work! Give us a call.
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