March 28, 2019 — 3 min read
The Pound is weaker this morning after another attempt in the House of Commons to resolve the Brexit Stalemate. Members of parliament voted late into the night on a set of eight indicative votes in the hope of finding out what Brexit solution could achieve a majority in the house. This included the likes of a customs union, Norway plus style agreement, second referendum and a temporary ‘holding’ agreement while further negotiations take place.
The results were released late yesterday and none of the indicative scenarios achieved a majority. For the currency markets, this confirms uncertainty and therefore risk aversion.
The currency however did manage to gather some demand after PM Theresa May made a statement to the 1922 committee saying, she would leave her post earlier than anticipated should her deal be approved by the house of commons. This saw a number of ‘Hard Brexiteers’ like Boris Johnson saying they would now back the PM’s deal should a third meaningful vote be brought in front of parliament.
It is expected that the government will bring this vote back in front of parliament on Friday, despite the speaker of the house saying ‘material change’ needed to be proved. The fly in the ointment here is that the DUP continue to hold their ground on voting down the PM’s deal as they are concerned about the backstop agreement.
We have no fundamental economic data out from the UK today and therefore the direction of the Pound will come from headlines – specifically regarding the ongoing talks between the PM and the leaders of the DUP.
The Euro weakened against a basket of currencies yesterday as ECB president Mario Draghi said trade tensions were holding growth back and that if the US is slowing down, the European economy could be in for a difficult time. This highlighted the poor economic data recently released from the EU and commitment from the central bank to again artificially stimulate the European economy. The focus for the single currency today will be the release of consumer confidence numbers and German inflation numbers due out.
The Dollar has taken advantage of the weaker Pound and global geopolitical uncertainty and is stronger against major currencies. The focus for the Greenback today will be the Q4 GDP annualised number.
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