A majority was found in Parliament yesterday evening with MP’s voting in favour by just one vote to force Theresa May to request an extension to the 12th April Brexit deadline, further reducing the probability of a hard Brexit. This will now be debated in the House of Lords and if passed into law will still have to be agreed by all 27 EU members.
With no clear path ahead the Pound continues to be stuck in a relatively tight range on a monthly basis against other major currencies. However, day to day Sterling is much more volatile as the currency markets try and make sense of all that is going on right now. The issue is such that even computer driven algorithms are struggling to deal with the sheer volume of news headlines being produced daily. A recent report on Reuters said that automated trading systems are used to dealing with around 15 headlines a day on British politics, however recently they have been required to process up to 400 headlines a day. This is causing confusion within the programmes and resulting in erratic trading patterns.
The focus today will be the ongoing talks between the PM and leader of the opposition. The currency is finding strength off the back of the softer Brexit sentiment. Michel Barnier has this morning said he is willing to grant an extension to Article 50 as a last attempt to come to a resolution.
The Euro had a better than expected day after the Services PMI data for the major European economies were reported above the market expectations. Italian, French and German services reports were better than forecast and against recent poor economic data. The focus today will be the meeting minutes of the March ECB meeting, any further clarity on monetary policy easing will have an impact on the single currency.
The US Dollar had a muted day yesterday as the focus was on the Pound, today however the focus will shift back across the Atlantic as trade talks between the US and China kick off. This will see a shift in risk sentiment across the globe.
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