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Early morning yesterday, Sterling slumped sharply before recovering in later trading. The volatility in the pound is not surprising as we move closer to the deadline set for triggering article 50. It seems the pound crashed through on sell orders on the downside especially versus the USD and JPY. The fight back came after key support levels kicked in and comments from the MPC hawk suggested that UK interest rates could move higher sooner than expected.
Article 50 takes the focus
Today, focus will once again be on parliament as the article 50 bill heads to its third and final reading in the House of Commons. Last night, the bill survived an attempted amendment to force the government to consult parliament on the deal struck with the EU before being finalised, after it was promised that a meaningful vote would occur. If passed, the bill will authorise the government to formally begin Brexit negotiations and the formal process of leaving the EU.
Attentions remains on Trump’s administration
Today is very quiet in terms of data, and attention will mainly be on any feedback from the Trump’s administration and developments in the House of Commons. It is still unclear what Trump’s fiscal plans will be and once known, it will shed more light on USD momentum and monetary policy direction. US data has also taken the wind out of the sails of a March rate hike with disappointing wage inflation on Friday.
Spotlight on Europe
Europe is also coming under some spotlight on the political scene, with the François Fillon scandal which will increase the focus on whether Marine Le Pen has gained in the polls. In addition, Greece has gained some new attention, following a bleak assessment by the IMF confirming that the country needs further debt relief and the surplus targets are unrealistic. The negative feedback from Europe has helped the EUR to shed value against the USD and GBP.
