Home Daily Commentaries Brexit takes a back seat in a packed fundamental calendar

Brexit takes a back seat in a packed fundamental calendar

Daily Currency Update

GBP - British PoundFor the past 2 years Brexit has been the agenda and more often than not the main driver for Sterling. The biggest impact felt at the end of 2018 and the first quarter of 2019. The lack of news for the past 2 weeks has left many scratching their heads and it almost feels like the calm before the storm. The mute button has well and truly been pressed, for now at least. Telegraph deputy political editor, Steven Swinford reported yesterday that Brexit is officially dead for this week. Its been taken off the government’s agenda and replaced by Northern Irish business. The only Brexit related news came during the initial hours of Tuesday, the Guardian reported talks between the Tories and the opposition Labour party are towards possible compromise. This could perhaps place a lot more focus on the BOE rate decision amongst other fundamental releases for the working week ahead. The problem is however, the BOE will not be shifting on their policy until Brexit is well and truly resolved. Carney could surprise to the upside by delivering a hawkish statement and with other areas of the economy kicking out some pretty strong numbers we cannot rule this out. Much of this is being down to stockpiling and uncertainty around the UK’s departure but in the interim it can be seen as a positive and may well be what is keeping sterling well supported during the uncertain times. Its another quiet day for the UK calendar before we kick off on Wednesday with the 1st round of PMI’s, this being from the manufacturing sector.Sterling crosses were quiet during Monday's session, the biggest moves were cable. With a range of about 40 points though it was still a steady sideways day of trading.

Key Movers

Across the pond, the US is still playing catch up from the Government shutdown. We were treated to a double whammy release of Personal spending for February and March and the same for Core PCE Price index. Consumer spending surged in March by 0.9%, highlighting the largest monthly gain in almost 10 years. A print for February showed only a 0.1% gain. Following these numbers Core PCE inflation, which highlights the change in the price for goods and services purchased by consumers, was flat in March knocking the yearly rate down to 1.6% from 1.7%. This being the lowest rate since September 2017. With many anticipating a FED rate cut by the end of the year it’s hard to determine if this is definitely the case. Growth remains strong for a cut yet inflation remains too weak for a hike. Its expected this week's FED meeting will keep them on the side-lines so we are not anticipating much of a reaction on Thursday night's release. Price moves were very few and far between for US pairs during Monday. Spanish elections were having limited action on the single currency but was felt a little more on Spanish stocks. Spain’s ruling socialist party took the largest share of votes in Sunday's election but this did not constitute enough to form a majority government. They will now seek to form a coalition, a process that some have warned will take much time. We have a raft of European releases this week, the most scrutinised will be the ones coming from Germany after a dire start to the year. During Asian trading session the Aussie has drifted lower following the latest release of Manufacturing PMI and the purchasing Managers Index from China. Whilst both numbers showed expansion it was lower than the expected number underscoring weakness in the world's second-largest economy. GBP/AUD rallied from the low 1.83's to a high of 1.8390 off the back of the release.

Expected Ranges

  • GBP/USD: 1.2900 - 1.3010 ▲
  • GBP/EUR: 1.1510 - 1.1590 ▲
  • GBP/AUD: 1.8300 - 1.8450 ▲
  • GBP/CAD: 1.7390 - 1.7540 ▲
  • GBP/NZD: 1.9340 - 1.9520 ▲