GBP falls as reports surface that Brexit talks have stalled…
Yesterday the Guardian newspaper cited comments from Jeremy Corbyn that Brexit talks with the government had stalled, sending the pound lower.
The report confirmed there was no agreement on the customs union, environment or workers’ rights. The main reason discussions are perceived to have stalled is Corbyn’s view that the Conservative party are aiming for post-Brexit deregulation including pursuing a trade deal with the US. Sterling slid as soon as these comments crossed the wires yesterday afternoon, continuing its descent into the European close before finally stabilising. Even though concerning, the report should be taken with a pinch of salt. There’s a lot of bravado on Corbyn’s part and the talks have only temporarily stalled, there is no clear impasse.
Overnight, Chinese growth figures have impressed to the upside with Q1 2019 GDP printing at 6.4% vs. 6.3% forecast. These numbers followed a softer inflation reading out of New Zealand which had the Kiwi dollar under pressure. Chinese data has created a pick-up in risk sentiment with stocks rising and the US dollar weakening heading into the European open.
Today’s economic calendar is an interesting one. After yesterday’s strong UK employment report, the pound will face another test in the form of CPI. Inflation has been somewhat tamed in 2019 by an unwillingness from businesses to raise prices in uncertain times, mixed with a more stable currency. Today’s figures alone won’t influence the Bank too much but they could cause a knee-jerk reaction in GBP. Elsewhere, Eurozone and Canadian inflation figures will also cross the wires later in the day.
Written by Viv Savani. 8:46am, April 17th 2019
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