PM Mays defeat sees No-Deal still on the table, Pound stutters
15 February, 2019
It has been a busy and mixed week for the Pound for Ecostats, seeing a solid GDP reading on Monday, whilst posting poorer than expected manufacturing and Industrial data, but with inflation dropping to a two-year low. However, and has been the case for some time now, Brexit does remain at the forefront of people’s minds, and indeed the market. Yesterday saw Theresa Mays attempt to remove a no-deal scenario from the table defeated by 45 votes, and as a result, the Pound lost ground. The ongoing uncertainty and downside risk have seen the Pound perform the worst of all the G10 currencies in the last week.
This defeat only puts more pressure on May, and indeed GBP, as the clock continues to tick towards the 29th March deadline. PM May has said this result will only result in the EU being less likely to negotiate, as the apparent stalemate plays on, and now there is also increased pressure on Ireland to somehow change the current status quo with the suggestion that if a no-deal Brexit was the outcome it would be largely their responsibility to solve the backstop issue. As the Brexit clock runs down, and with the possibility of a no-deal still firmly on the table, downside risks to the rate remain extremely high, and in current conditions, without a no-deal being the firm outcome there is room for rates to drop another 1.5-2%.
This morning we have UK retail sales data which is expected to show growth, at 1 PM we have a speech from ECB member Couere, and this afternoon we have a raft of data from the US, including the Michigan consumer sentiment index which measures economic sentiment and does have the ability to shift rates.
Whilst on the other side of the pond President Trump looks to declare a state of emergency to secure funding for his very controversial wall, it certainly seems that if not already, we are entering a state of emergency of our own. With 42 days to go to the Brexit deadline, and the impasse between the UK and the EU still visibly apparent, the Pound remains floating in the wind, and as we get closer to the 29th March increased volatility and negative sentiment could simply continue to push rates lower.
Speak to us today for guidance on how you can help remove the risk, as simply waiting for the current situation to somehow change may not pay off, as we are seeing with the ongoing Brexit negotiations.
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