Adopting a V shaped trade throughout the day, Sterling largely parred the gains that it had enjoyed throughout overnight Asian and early European trading this morning. By midday, the Pound had lost more than 1% of the gains it had made during the overnight sessions following the technical agreement of the Northern Irish backstop agreement. However, as markets began to orientate themselves around May’s Cabinet meeting this afternoon and react to the Prime Minister’s attitude and words during her appearance in the Commons this afternoon, Sterling began to rally once again. Given the lack of resignations during the reading period of the technical agreement agreed in Brussels yesterday, Sterling traders remain optimistic for May’s forthcoming statement outside of Number 10. The speech had been expected to take place around 5pm, however, will little sign of resolution within the Cabinet meeting thus far, it is likely that her appearance will be delayed for up to two hours. Fallout will therefore be measured within the New York and Asian sessions, with European able to have their say tomorrow. Yesterday’s deadline for a reformed budget proposal from the Italian coalition to the European Commission has come and gone, without a package of resolution. The burden now lies upon the European institution to either invoke the excessive deficit procedure, punitively approaching the fiscally irresponsible state, or, pursue a more conciliatory tone. Consumer Price Index data within the United Kingdom came in flat this morning, with annualised and month on month inflation underwhelming consensus expectations. The weak data still showed above-target inflation, however, at 0.1% below expectations, the data undermined the confidence in the need to normalise monetary policy should a stable Brexit be achieved.
Discussion and Analysis by Charles Porter
Eastern Europe and Central Asia Between 2010 and 2019 economic growth in this large geographic area averaged 4%. According to the World Bank, that growth will decelerate to 2.5% for the next 2 years and even stripping out Russia that will still be lower at 3.3%. Inflation, weak external demand from the EU, global uncertainty […]
UK Employment At 75.1%, employment for people aged 16-64 looks sort of OK depending on what that really means, but it does not alter the fact that there are currently 1.55 million people who are unemployed, or 4.4% of the potential workforce. Another much more significant number, is that there are currently 9.27 million people […]
British Pound A 7 month high versus USD, and GBP is at present benefitting from the self inflicted wounds that the USA is continuing to suffer, the latest of which is the speculation over whether POTUS will defenestrate the Chair of the Federal Reserve. At the moment, and we choose our words carefully given the […]