Following a busy week in parliament, the pound rose of the back of key Brexit votes. Sterling rallied against the euro and US dollar alike after parliament voted against leaving the EU without a deal and backed asking for an extension to Article 50. Although any extension to Article 50 is dependent on agreement from the block, a vote is due on Thursday, markets have seen this as a step in avoiding a disorderly exit from the EU. Theresa May will be putting her deal to Parliament for the third time this week, despite being voted down twice before. As the deadline draws close and further delays are on the horizon, more members of her conservative party could back her and see a deal agreed. Last week saw highs of 1.1776 against the euro and 1.3346 against the US dollar.
The week ahead:
Once more the pounds movements will be focused heavily around Brexit headlines. The main Brexit news will centre on PM May’s deal going before parliament for the third time and any reports of out of Brussels regarding the likelihood of an extension to Article 50. The Bank of England will also be meeting on Thursday for their monetary policy summary and vote on interest rates. With the current economic climate and uncertainty, investors will be listening closely to see what precautions the BOE has in place for Brexit. Retail sales figures will also be released on Thursday morning at 9.30 GMT.
For the euro, the key data release will be flash manufacturing and services PMI data for march. Due out on Friday at 9.00 GMT, forecasts show for manufacturing to improve from 49.3 to 49.6, and services to fall from 52.8 to 52.7. On Thursday the EU economic summit will be taking place thought the day, the main topic of discussion will be surrounding Brexit and a vote on weather to grant the UK an extension to Article 50. We can expect volatility throughout the day as investors will be watching closely to predict the likely outcome.
This week the Fed will be meeting on Wednesday. The main event will be the FOMC press conference, following on from economic projections and interest rate announcement. Although the interest rates are forecast to remain at 2.50%, any hints towards the timing of future rate rises during the press conference will be a source of volatility. On Friday, flash manufacturing and services PMI’s will be released at 1.45 GMT, both are forecast to show growth in March which should be good for the dollar.