GBPUSD at 1.3200 and GBPEUR above 1.1700
February mortgage approvals fell well below forecasts at 35.3k, down from 39.6k in January, triggering fresh doubts over the housing sector, but the impact was offset by gains in oil prices. Sterling gained on its peers throughout the morning on fresh speculation that ERG group members, notably Rees-Mogg, were starting to shift towards supporting the government’s Withdrawal Agreement. Further speculation that Theresa May would announce a date for her resignation to boost support for the deal added purchasing appeal.
The Pound retreated again after reports that the DUP would favour a long Brexit extension rather than accept the current deal. Volatility continued unabated and the Pound pushed the Euro to near 1.1730, but retreated to near 1.3200 on the Dollar, from a peak above 1.3250.
The House of Commons will hold a series indicative votes on Brexit today, and although not binding, they will indicate any available consensus within the House and highlight potential paths forward.
US consumer confidence declined to 124.1 for March from 131.4 the previous month and was below consensus expectations as both the present conditions and expectations components deteriorated. Construction data was below consensus forecasts with housing starts declining 8.7% for February to an annual rate of 1.16mn while there was a dip in building permits to 1.30mn from 1.32mn the previous month. The Richmond Federal Reserve (Fed) manufacturing index declined to 10 for March from 16 as order backlogs declined further. Price pressures declined slightly while the labour market remained tight.
San Francisco Fed President Daly stated that the central bank had not met the 2% inflation target on a sustained basis and that the Fed needed to be vigilant about falling inflation expectations. Overall, she reiterated that patience was needed, although the overall rhetoric was dovish and futures markets still priced in an over 65% chance of a rate cut by the end of 2019. The Dollar was resilient, however, and the Euro declined to two-week lows near 1.1250 against the Greenback.
Today at 12:30 GMT we get the US trade balance (Consensus: $-57.0bn) and at 14:00 we get the US current account balance (Consensus: $-130bn).
German numbers yet again came in below market expectations, with the IFO Consumer Confidence Survey missing its mark in both March and April. Combined with mixed data out of the US, the single currency declined against both the Dollar and the Pound. European Central Bank (ECB) member Makuch spoke yesterday and announced that a Eurozone rebound for the second half of 2019 is realistic, however the market was not buying it and the Euro continued to slightly dip.
Draghi speaks this morning and is quickly followed by the ECB’s Praet. There is then Italian consumer and business confidence, the Swiss ZEW survey expectations and the ECB’s Lautenschlager speech which will be of interest. Rounding off the day, another two ECB members speak, De Guindos and Mersch, which may cause some volatility but realistically, all eyes will be on the vote this evening in the House of Commons.
Data to watch:
01:00 NZD RBNZ Rate Statement
01:00 NZD RBNZ Interest Rate Decision
08:00 EUR ECB’s President Draghi speech
08:45 ECB’s Praet speech
09:00 CHF ZEW Survey – Expectations (Mar)
10:00 EUR ECB’s Lautenschlager speech
N/A EUR 10-y Bond Auction (Germany)
10:45 EUR ECB’s De Guindos speech
12:30 USD Trade Balance (Jan)
12:30 CAD International Merchandise Trade (Jan)
13:30 EUR ECB’s Mersch speech
14:00 CHF SNB Quarterly Bulletin (Q1)
19:30 GBP UK Parliamentary Vote on Brexit
23:50 JPY Foreign Investment in Japan Stocks (Mar 22)