Good morning. In today’s post I’ll take a look at the week ahead, and focus on what could affect GBP exchange rates this week. The most important events will be related to Brexit, with economic data releases likely to play less of a role in moving the Pound.
Brexit – what is happening this week?
It’s crunch time for MP’s to decide how to proceed with Brexit. Today, MP’s will be debating a number of amendments with a view to having indicative votes later this week, so see if there is a consensus on how to proceed. On Tuesday, the PM could try to get her vote through again, but only if she is confident of gaining support for it.
On Wednesday, it’s likely we’ll see the indicative votes in the House of Commons. This isn’t binding, but could indicate what MP’s would accept as a majority, but it would still need to be passed by the Cabinet and agreed (or ignored!) by government.
Thursday is another day when the PM could try to get her vote through again. I think it’s 50/50, she is trying to convince Brexiteers to support her plan, in return for her agreeing to step down before the next round of negotiations.
The alternative is Parliament taking control of the process and pushing the UK towards a closer partnership with the EU, including a Customs Union and Single Market access. This of course would limit the ability for the UK to strike free trade deals, arguably the main benefit of leaving the EU.
What economic data could affect exchange rates?
Away from Brexit, there are a variety of economic data releases to watch out for in the week ahead. These are usually the main thing that affects exchange rates. With the current political instability, of late it has been less important. But, any deviation from the expected result can still move the price of currencies.
Monday 25th March ’19 – We have already had decent data out of Germany this morning, helping to strengthen the Euro and move GBP/EUR rates lower. There isn’t much from the UK today so Brexit related events will be the main driver for Sterling. This evening we have Trade Balance numbers from New Zealand that could affect GBP/NZD rates. MP’s continue to debate Brexit.
Tuesday 26th March ’19 – Again very quiet in the UK. Wouldn’t have mattered anyway, as markets will be fully focused on Brexit! We do have a variety of releases from the USA that could move GBP/USD rates, including Housing Prices, and Consumer Confidence data. We could see an attempt today for the 3rd ‘meaningful’ vote.
Wednesday 27th March ’19 – New Zealand announces its interest rate decision, but I think they will leave rates at 1.75%. Any hints at future policy could move GBP/NZD. The European Central Bank (ECB) make speeches today, and any clues to future monetary policy could affect GBP/EUR. We round off the day with US Trade Balance numbers. MP’s today likely to vote on alternative plans.
Thursday 28th March ’19 – Most data today is from the USA: Jobless Claims, a FED Speech, GDP numbers, and Home Sales, Better than expected numbers would push GBP/USD lower. May could bring the 3rd vote today, if she didn’t already on Tuesday.
Friday 29th March ’19 – The first meaningful UK data of the week is released today, and we should also have a clearer picture on the way forward with Brexit. At 09:30am we see GDP numbers and also a release of consumer confidence. We think GDP will be +0.2%, any higher would strengthen the Pound.
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