As the Brexit deadline draws near, time is running out for PM May to persuade Brussels to make amendments to the Brexit deal in order to gain approval from parliament. Yesterday PM May told lawmakers to hold their nerve over Brexit and give her more time to re-negotiate her deal. Despite this, the current state of deadlock and growing concerns over the possibility of a no deal Brexit and disorderly departure from the EU continues to weigh on the pound. The pound is currently trading around 1.1380 against the euro and 1.2875 against the US dollar.
This morning saw CPI and RPI data for the UK released. Both figures came in below forecast with CPI falling from 2.1% to 1.8%, and RPI falling from 2.7% to 2.5%. High inflation means the Bank of England is likely to increase interest rates which is good for the pound, falling inflation delays interest rate hikes and causes pound weakness. At midday parliament will sit for Prime ministers’ questions, likely to have a heavy focus on Brexit, some volatility can be expected.
Across the pond, inflation data for the US will be released at 1.30 GMT. Investors will have a heavy focus on this as the Federal Reserve Bank have communicated to markets that it would shift to a more data-driven stance when considering future interest rate moves. The forecast is for an increase from -0.1% to 0.1%, a result above forecast will cause dollar strength. For the euro there are a couple of minor data releases, however investors will be waiting for the German GDP figures due out tomorrow.