Crunch Time For Brexit

Last week was a fairly stable one regarding sterling exchange rates as markets awaiting the string of potential votes surrounding Brexit, set to be staged this week.

The pound was doing well against the euro, holding near two-year highs for the majority of the week up until Friday, where we saw sterling slide by over a cent. With no UK data releases on Friday, it seems investors were taking profit from sterling positions, The only data of real importance was the US non farm payrolls in the afternoon, which saw just 20,000 new jobs materialise, leading to dollar weakness, but only slightly. EUR/USD moved 30 pips while against sterling the weakness spike came at European close and quickly reversed,, with the pound losing further ground before the close of play.

The week ahead is headlined by Brexit voting with Theresa May taking her Brexit pan to vote again in Parliament. It seems fairly unanimous that MP’s will yet again vote against it and we will then see a further vote on Wednesday, to decide if we can leave the EU with no deal at all. Some Brexiteers wont mind this at all, but with many MP’s recently vocalising their anger at such a notion, its likely this will also be voted down and we will see a final vote on Thursday, as to whether we should look to push for an extension to Article 50. Theresa May has made her thoughts on this clear, but will have to go with the majorities decision.

As mentioned in our report last Thursday, there are various different scenarios that could play out, but the bottom line is its a hotbed for volatility amongst financial markets and those with a currency exchange to make in the coming weeks might be prudent to look at securing funds before the voting kicks off tomorrow. We have various tools available to you to mitigate risk, so speak to one of the team this morning to discuss your options.

Apart from the Parliamentary voting, we also have a few other key releases to effect exchange rates this week. The key ones are noted below:
Monday – German trade balance (8am), US retail sales (1.30pm), Bank of England member Haskell speech (2pm), Fed chief Powell speech (1am)
Tuesday – UK manufacturing and industrial production (9.30am), US inflation data (1.30pm), UK Parliamentary vote on Brexit (time n/a)
Wednesday – US durable goods orders (1.30pm), UK Budget report (time n/a)
Thursday – German inflation (8am), US jobless claims (1.30pm)
Friday – EU consumer price index (11am), US Michigan consumer sentiment index (3pm)

All eyes will be on the UK Parliament but there is also a fairly busy week for eco stats elsewhere, so keep updated via your currency consultant and the daily market commentaries.