Last night PM May achieved her objective and was granted an Article 50 extension to the 31st October 2019. There is an element of flexibility included, if the withdrawal agreement is ratified, the UK can depart immediately after.
Last night’s events did not create any significant movement through GBP crosses. Even though a longer than requested extension was offered, it was still shorter than many had anticipated. The ball is now back in the UK’s court with more hope now pinned on a potential surprise breakthrough between May & Corbyn. Pressure is mounting on the prime minister as the latest extension, mixed with prospects for maintaining a customs union with the EU to end the impasse, aggravated Brexiteers. The pound finds itself in complete limbo as a result. Political paralysis has spread into the currency as traders and dealers avoid trading it.
Yesterday’s ECB meeting proved a non-event. President Draghi towed a dovish line, ensuring the euro sold off. Continued rhetoric about providing accommodation and a preparedness to use all tools available kept the euro bears happy, with the single currency down nearly 0.75% by the end of the press conference. Most of these losses were pared at the New York close, however.
US inflation data and the latest set of Fed meeting minutes both broadly came out as expected, creating minimal impact of the buck’s progress. The Fed reinforced their current patient message while inflation numbers remained within the Fed’s target range. The greenback is maintaining its recent bout of strength and does not look like it will be dislodged anytime soon.
Today’s session is a little quieter than yesterday’s. Focus will be on the UK prime minister and response/reaction to the Article 50 extension. Additionally, we’ll have a number of Federal Reserve member speeches mixed with some tier 2 US economic numbers.
Written by Viv Savani. 10:14am, April 11th 2019
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