The pound gave up some of the gains made in the previous week as British lawmakers voted down a proposal on Tuesday evening that could have prevented a ‘no-deal’ Brexit. With less than two months to go before the UK is set to say goodbye to its EU neighbours, parliament asked May to renegotiate the deal that the EU says it will not change. GBPEUR moved south from a high of 1.1541 just before the votes took place to a low of 1.1381 on Friday morning, after poor Manufacturing PMI data from the UK also hindered the home currency. The survey data released on Friday highlighted the degree of uncertainty British manufacturers still have and the pound fell more than half a percent to 1.3050 against the dollar as a result.
The week ahead
GBP – With Theresa May continuing to negotiate with the EU this week any rumours about anything she has managed to secure will undoubtedly cause volatility. From a data perspective, Construction PMI data released this morning will be today’s only point of interest. Services PMI figures will be announced tomorrow, before Super Thursday sees the Bank of England’s latest Inflation report and votes from the Monetary Policy Committee on Interest rates. Particular interest will be paid to the vote split as this will be interpreted as an indication of confidence in the economy this year.
EUR – After news last week that Italy had fallen into recession at the end of last year, CPI data this morning will be watched closely. Tomorrow, a host of PMI releases from Spain, Italy, France and Germany will reach us in the morning, with retail sales numbers for the euro region following shortly after. An economic bulletin from the ECB will be revealed on Thursday with EU economic forecasts also made public. Close attention will be paid to the release as the expectation that the ECB will refrain from raising interest rates this year is becoming increasingly likely. German trade balance and French and Italian Industrial production numbers will then round off the week on Friday.
USD – The dollar has edged higher this morning as strong jobs data last week has lent support to the greenback. Its quiet from a data standpoint today, however, tomorrow brings ISM Non-Manufacturing PMI which will grab markets focus in the afternoon. The data releases towards the end of the week will likely have little impact but the final few days will see speeches from FOMC members Quarles, Clarida and Bullard.