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Sterling Jumps Again as Markets Bet that No-Deal Brexit Won’t Happen

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Pound News: Brexit News Dominates Headlines as No-Deal Rejected by Parliament

Yesterday’s no-deal Brexit debate was a little messier than analysts expected, with an amendment to prevent a no-deal Brexit at any point unexpectedly passing, followed by Conservative Party members voting against the subsequent party whip and having to step down from their roles.

Sterling surged in demand following the strong rejection of no-deal Brexit as bets that it would take place lessened. The vote indicated how much power the UK government had lost over the process and how much control had been taken by Parliament.

This week’s Brexit saga isn’t over just yet. While Sterling will continue to react to last night’s vote, all eyes are on Parliament again today as MPs will vote whether or not to formally delay the Brexit date. Even if the vote succeeds, uncertainty over whether the EU will allow an extension may keep pressure on Sterling.

 

Euro News: Eurozone Industrial Production Beats Forecasts

The Euro was a little firmer versus the Pound compared to other major currencies like the US Dollar yesterday, and this was largely due to continued signs that the Eurozone’s economic outlook was beginning to improve.

Due to stronger energy output and performance in France and Italy, the Eurozone’s January industrial production results beat expectations. The yearly figure diminished to -1.1% rather than the expected -2.1%.

More influential Eurozone data will be published today, in the form of February’s inflation rate results from Germany and France. The Eurozone’s overall inflation rate report will be published tomorrow.

 

US Dollar News: Mixed US Data Fails to Give US Dollar a Boost

The Pound was able to more easily drive GBP/USD movement yesterday, due to fairly limp US Dollar movement. Following underwhelming US retail and inflation data earlier in the week, yesterday’s US data was too mixed to make the US currency appealing.

While January’s monthly durable goods orders results beat expectations and avoided contraction, the figures excluding transport were disappointing. US PPI also fell short month-on-month, overall, giving investors little reason to buy the US Dollar.

Today’s US export and import prices data is unlikely to drive GBP/USD much compared to anticipated Brexit news, with US Dollar investors likely to be anticipating tomorrow’s US manufacturing and industrial production data.

 

Canadian Dollar News: Rising Crude Oil Limits CAD Losses versus Strong GBP

The Canadian Dollar was the sturdiest of the major currencies against the Pound’s broad volatility yesterday – despite a lack of fresh supportive Canadian data or news this week so far.

This was due to various factors such as higher market demand for taking risks, as well as stronger prices of oil, Canada’s biggest export. A jump in WTI crude oil was the biggest cause of Canadian Dollar support yesterday.

This week’s first notable Canadian dataset will be published today. If Canada’s January new housing price index beats expectations, it could offer the Canadian Dollar some more solid support to trade on.

 

Australian Dollar News: Australian Dollar Demand Limited by Growth Expectations

Concerns about Australia’s slowing economic outlook, as well as analyst predictions of the currency weakening and the latest disappointing Australian confidence stats, all made investors hesitant to buy the Australian Dollar yesterday.

The Pound was able to more easily secure gains versus the ‘Aussie’ as a result. Market demand for riskier trade-correlated currencies was too limited to offer the Australian Dollar much strong support.

Australian Dollar investors will be reacting to Australia’s March consumer inflation expectations results today, as well as any notable shifts in risk-sentiment that may also be sensitive to Brexit developments.

 

Upcoming Data

 

Thursday, 14th March

00:00    Australian Consumer Inflation Expectations

07:00    German Inflation Rate

07:45    French Inflation Rate

12:30    Canadian New Housing Price Index

12:30    US Export and Import Prices

14:00    US New Home Sales

 

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To keep up to date with the Euro, visit the Euro blog in our Currency News section.

 

David Worthington

Associate Director

daw@fcgworld.co.uk

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