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Is PM’s job included in Withdrawal Deal?

Is PM’s job included in Withdrawal Deal?

Choppy trading conditions continued but the extension to Article 50 provided some support to the Pound. Speculation of a move towards a ‘softer’ Brexit increased but the clouds of uncertainty remain. Sterling also faced weaker risk appetite and a retreat in oil prices, but the upper lip remained stiff. The Euro fell to lows below 1.1695 after sustained pressure while the Pound moved to 1.3200 against the Dollar. CFTC data recorded a sharp decline in short-term bets against the Pound, the lowest level since June 2018, limiting the scope for further short covering (which would drive the price up).

The weekend saw further speculation that Theresa May will be forced to resign, usually linked with speculation of Withdrawal Agreement votes in return. Given the lack of a breakthrough, Sterling retreated below 1.3200 on the Dollar. The markets are braced for very choppy trading surrounding parliamentary developments this week.


The US PMI manufacturing index declined to 52.5 for March which was below consensus forecasts of 53.6 and the lowest reading for 21 months which reinforced concerns over the US and global outlook. The services-sector index declined to a two-month low of 54.8 from 56.0.

There was also an easing of cost pressures which increased reservations over the US outlook. Latest data recorded the largest budget deficit on record and the deficit for the first half of the fiscal year 2018/19 widened to $544bn from $390bn the previous year as receipts stalled and spending rose sharply.

Underlying Dollar confidence remained fragile with the Euro edging back above 1.1300 against the Dollar, whilst sitting around high 1.3100s against Sterling.


Friday was a tough day for an already under pressure Eurozone, with French PMI numbers missing the mark and the German manufacturing numbers also coming in much lower than expected. Their services numbers performed better but still demonstrated a slowdown which hampered any Euro growth. The manufacturing numbers were actually a six-year low, which in turn had a big effect on the German ten-year bond yields, increasing speculation that the Eurozone’s largest economy was heading towards recession. Negative comments from European Central Bank’s (ECB) President Draghi did the single currency no favours and it dipped below 1.1280 versus the Dollar.

Early data today sees German IFO expectations, current assessment and business climate which will most probably cause quite a lot of volatility. From an economic data perspective, this is pretty much the only thing that will be of interest to traders, however political news out of the UK, especially around May’s Cabinet, will almost certainly create some volatility.


Data to watch:

04:30 JPY All Industry Activity Index (MoM) (Jan)
06:30 JPY BoJ’s Harada speech
09:00 EUR IFO – Expectations (Mar) (Germany)
09:00 EUR IFO – Current Assessment (Mar) (Germany)
09:00 EUR IFO – Business Climate (Mar) (Germany)
10:30 USD Fed’s Harker speech
12:30 USD Chicago Fed National Activity Index (Feb)
20:30 AUD RBA’s Ellis speech
21:45 NZD Imports (Feb)
21:45 NZD Trade Balance (YoY) (Feb)
21:45 NZD Exports (Feb) 

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