Is it all going wrong?

12th March 2019 Off By binary

GBP
Brexit negotiations are dwindling as we approach the critical date of March 12th whilst, due to this, uncertainty continues to undermine the Pound. GBPUSD sank nearly 1% to record its largest single-day decline on Friday last week.

The meaningful vote will be held on Tuesday evening, following a full day of debate in the House of Commons – the time of the vote will be announced in due course. This will be the most interesting and important vote and, if the deal is voted down, it’s got to be one of two things.

  1. The UK will leave the EU on 29th March without a withdrawal agreement or;

  2. The departure date will be delayed.

Markets suspect that, despite the UK’s government ministers’ attempts to persuade the EU to make concessions in order to get a deal through Parliament and acceptable to the MPs who voted against it in January, the deal will indeed be voted down on only minor tweaks to the existing agreement that was so badly defeated last time around. There are of course a few other outcomes, including the EU offering more time for the UK to get a deal over the line.

The market focus remains glued to the UK parliament vote on Tuesday which, if rejected, will be followed by a vote on Thursday over an extension of Article 50.

USD

US employment data surprised the market last week with total non-farm payrolls increasing by a mere 20k against an estimate of 180k. The unemployment rate, however, declined to 3.8% in February. While the market continued to evaluate the shocking data, the US Dollar index moved lower.

There are now growing fears that the global economic slowdown would be more pronounced than initially expected. On another front, nothing seems to be moving on the US-China trade dispute, where news went from the imminence of a deal to the current ‘radio silence’ in just over a week.

Data-wise today, January’s Retail Sales are due, seconded by remarks from Chief Powell at a conference in Washington.

EUR

German second-tier economic data, due today, will be watched fairly closely. Industrial production and trade balance numbers may produce some volatility early on in the session. The US Dollar had a tough time on Friday, which brought the EURUSD down slightly. Recent dovish tones from the European Central Bank (ECB) have meant that some momentum has been taken out of the pair, with the central bank saying they will not raise interest rates until the end of 2019.

All day today sees a Eurogroup meeting as well as the aforementioned German data. Retail sales out of Spain are quickly followed by consumer inflation expectations out of the UK then finally the Bank of England’s (BoE) Haskel speech at 1 pm. The big news this week will be the Brexit vote tomorrow, with reports surfacing this morning that talks with the EU are at a deadlock.

 

Data to watch:

24H EUR Eurogroup meeting
07:00 EUR Trade Balance s.a. (Jan) (Germany)
07:00 EUR Industrial Production s.a. (MoM) (Jan) (Germany)
12:30 USD Retail Sales ex Autos (MoM) (Jan)
12:30 USD Retail Sales control group (Jan)
12:30 USD Retail Sales (MoM) (Jan)
13:00 GBP BoE’s Haskel speech

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