EU members are meeting today to discuss and vote on an extension to Brexit which could be as much as a year away after Donald Tusk, president of the European Council suggested this as his preferred option. His view being that a short extension will just result in ”a rolling series of short extensions and emergency summits, creating new cliff-edge dates.” In an invitation letter addressed to EU members the message was clear that it is in the interests of all to avoid the UK crashing out of the UK on Friday. “Given the risks posed by a no-deal Brexit for people and businesses on both sides of the English Channel, I trust that we will continue to do our utmost to avoid this scenario”.
The extension is expected to be flexible and can be brought forward if a deal is finally agreed. There are likely to be some caveats in place including “No re-opening of the Withdrawal Agreement”. If this transpires it will be a further blow to Theresa May who was requesting an extension to the end of June.
A longer extension will not please the Brexiteers in her party, as again it increases the probability of a much softer Brexit or no Brexit at all. EU members are meeting at 6pm, with voting due to take place later in the evening.
On the data front, UK GDP and manufacturing numbers have already been released better than expected this morning which has been attributed to manufacturers changing the timing of their activities and stockpiling ahead of Brexit.
In Europe we have the European Monetary policy announcement at 12:45 pm and statement at 1:30 pm. With recent data further confirming a slowdown in the region and the IMF yesterday cutting their growth forecasts by .6% close attention will be paid to Mario Draghi’s comments and any announcements of additional monetary stimulus either now or in the future. The euro has been coming under pressure recently and we should expect volatility for the single currency this afternoon.
From the United States, we have inflation figures released and the minutes from the FOMC’s last monetary policy meeting. They announced no immediate plans for further quantitative tightening and will holding off from further interest rate rises. At the time, they cited the global slowdown, the impact of trade wars with China and knock on effects of Brexit. The minutes will be studied closely, as they will provide more detail around their decision, especially as the announcement was largely unexpected given the recent pace of interest rate rises in the US.
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