GBP - British Pound
Friday brought with it the pound's most volatile time of the week as the Bank of England decided to leave interest rates unchanged. The MPC voted 7-2 in favour of a rate hold, when the general consensus was 5-4/6-3. The pound’s market position was very much up in the air before the rate decision, as it was estimated that the likelihood of a rate cut was around 47%, making it the tightest rate decision in the last 12 months.
The market jumped from 1.3024 to 1.3075 seconds before the news was officially posted, leading to speculation that there was foul play at hand. Britain’s financial watchdog is expected to launch an enquiry into a few hundred million worth of futures placed moments before the official announcement. Many are suggesting insider trading/an insider leak, however I’m sure the anonymous investor will claim a well-timed trade.
Later that evening, the UK officially left the European Union after 3 years of, what seems to be, no progress. Barnier has spoken on the matter since then and reiterated that more than ten months is needed to reach a deal. It estimated that both parties will meet monthly in order to hash out the details of the divorce, however many suggest this may still not be enough. The UK claims to want accelerated talks and has ruled out an extension to the transition period beyond end 2020.
The EU is insistent on equality around trade, close regulatory alignment, and no regulatory dumping. The UK is clear that it will no longer be an EU rule taker and there will not be regulatory alignment, with the Chancellor telling businesses to adjust to a future where Britain no longer follows EU rules and regulations.
This week may be quiet on the geopolitical front, however there are a number of US and Eurozone technical data releases. We have US manufacturing PMI's today as well as a string of employment data on Friday, including Non-Farm Employment Change, which is generally seen as a key mover of the US Dollar.
In addition, on Wednesday ECB President Lagarde is expected to speak at 8am and EU Economic forecasts are expected to follow.