Sterling ends the week in positive territory – Article 50 extension likely…
The pound enters the final trading day of the week hovering around the $1.30 and $1.15 level against the US dollar and euro, respectively. It’s been a volatile week of trade but one which has ultimately been positive for the pound.
On the economic data front, Tuesday’s UK employment report once again showed the domestic labour market holding up well in the face of uncertainty, with wage growth at some of the best levels in nearly a decade. From a Brexit-perspective, this week’s meeting between Theresa May and Jean Claude Juncker went as expected. The tone was both positive and constructive, which will hopefully enable PM May to achieve enough on the Irish backstop to make a material difference when it comes to Parliamentary arithmetic.
Another element which is propping up the pound is the expectation that, if a deal cannot be struck by the 29th March, there will be an extension to Article 50, allowing for 3 more months of negotiating time. Yesterday, 2 EU officials confirmed that, in their view, Theresa May will be forced to request a 3-month extension. This prospect is offering some support to the currency as it helps prevent a no-deal situation.
Today’s economic calendar has enough to ensure volatility remains into the close of the week. Eurozone inflation data will be the highlight across the morning session while Canadian retail sales will follow in the afternoon. They’ll also be a number of central bank speakers across the day, mainly from the Federal Reserve but also the European Central Bank.
Have a good weekend.
Written by Viv Savani. 8:47am, February 22nd 2019
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