The Pound is weaker at the start of a very important week. The currency is starting to reflect the extremely small amount of time the UK Government has in order to come up with a solution to the Brexit deadlock it finds itself in. All three options remain on the table I.e. the acceptance of Theresa May’s deal, a no deal Brexit or no Brexit at all.
The UK Press has been full of reports over the weekend that a faction within the UK government is again planning to overthrow the Prime Minister and take control of the Brexit process.
The direction in the currency market locally will again be driven by the cameras in the House of Commons as Members of Parliament vote on a motion to take control away from the PM and put the Brexit situation to a set of indicative votes by the House of Commons. The Pound will be vulnerable to any change in the current situation and accordingly caution is advised in today’s trading session.
The PM is meeting her Cabinet this morning and then the House of Commons will be back in action this afternoon.
On the Euro front, the single currency had a tough end to last week with the PMI surveys showing negative numbers for a number of the European countries – this will increase the chances of the ECB having to spring into action and artificially stimulate the European economy in the months ahead.
The German IFO survey of the current conditions has been released this morning, beating market expectations, the reading was 103.8 against an expected 102.9.
In the US last week, the FED left interest rates unchanged and we saw the probabilities of an interest rate hike in 2019 disappear as the FOMC said they would remain patient in their approach to monetary policy. The Greenback accordingly weakened as the currency yield looks set to remain the same for some time to come.
The focus for this week will be the consumer confidence numbers due out of Tuesday, a true reflection of the state for the US consumer.
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