Home Daily Commentaries May offers her resignation if her deal passes

May offers her resignation if her deal passes

Daily Currency Update

Big news from yesterday was Theresa May giving her conditional resignation if her deal was given full support. The resignation is conditional because if her deal is not supported she will continue as PM. Whilst this announcement has won some support among the Eurosceptic rebels it still failed to win the backing of the DUP. The Democratic Unionist Party, which props up her minority government, said it would vote against the deal if May brought it back a third time saying they cannot support a deal with the current backstop arrangement. But it remains to be seen if the speaker of the House, John Bercow, will allow a vote to even go ahead. He has already told government there must be significant changes to the deal to allow it to be voted on. If MV3 does get the go ahead (possibly on Friday) some analysts expect her to still fall short by 40-50 votes.


It was a busy night for UK politics and an evening where most were hoping a clear winner would emerge from a series of votes on an alternative Brexit path. We don’t always get what we wish for and last night’s results were testament to this. There was no clear majority on 8 alternatives so once again we still have a huge amount of uncertainty.



Sterling lost some of the ground it made the previous when Jacob Rees-Mogg pledged his support of Mays deal. GBP/EUR moved from a high of 1.1776 to a low of 1.1688. Cable followed suit and moved from its day high of 1.3264 to 1.3150.

Key Movers

The US trade balance improved in January to -$51.1 billion from a deficit of $59.9 billion in December. This is also better than the -$57.0 billion figure the market had expected and was largely due to a 2.6% month on month drop in imports while exports increased 0.9%MoM. The Fed has said that it had no plans to raise rates before 2019, and lowered its growth forecast for 2019 to 2.1%, down from 2.3% in December so USD moves are somewhat limited.


Cable has opened lower this morning but most of the price action is being delivered from Brexit news as stated above. China trade talks resume today with Mnuchin and Lighthizer arriving in Beijing for further trade discussion.


Little on the domestic calendar yesterday for the single currency. Draghi was speaking in Frankfurt and he didn’t really give any insight or information we haven’t heard before. He did however sound a bit more upbeat by mentioning the resilience of the economy and that they remain confident to reach their inflation target. That said, plenty of challenges are still abound and that will keep their hands tied for the most part.


The Aussie dollar has been stuck in a relatively tight trading band through the last month struggling to break above resistance at 0.7150 yet remaining largely well supported on moves approaching 0.7070/0.7050. Investors appear reluctant to extend upside moves as domestic economic performance falters and global growth concerns weigh on RBA expectations.


With little of note on today’s domestic docket the AUD has remained range bound leading into next week’s RBA policy announcement, wherein a definitive dovish shift could be the catalyst to force the dollar outside recent bonds.


The commodity-linked currency remained depressed in the wake of a weaker tone surrounding crude oil prices and lost some additional ground following the release of Canadian trade balance figures. The Canadian international trade deficit unexpectedly jumped to C$4.2 billion in January and the previous month's reading was also revised higher to C$4.8 billion as against $4.6 billion initially reported.


Next event for the Loonie will come from the release of GDP on Friday where a slight improvement is expected.


The Kiwi, still feeling the effects of a Dovish rate statement, was dealt another blow with the release of ANZ Business confidence. New Zealand’s business confidence fell to -38 in March, contradicting the market expectation of a slight improvement to -24.3. The data released today will likely boost expectations of an early RBNZ rate cut therefore our outlook for the Kiwi Dollar is negative.


The Kiwi has clawed back some of its recent losses, particularly against Sterling, moving from a 4-week high of 1.9505 to 1.9290. Next event will be when we hear from RBNZ Governor Orr later this evening.

Expected Ranges

  • GBP/USD: 1.1600 - 1.1750 ▼
  • GBP/EUR: 1.8450 - 1.8650 ▼
  • GBP/AUD: 1.7550 - 1.7700 ▼
  • GBP/CAD: 1.9150 - 1.9350 ▼
  • GBP/NZD: down - ▼