Lords warned against Brexit shenanigans
Bank of England Deputy Governor Cunliffe commented that the UK economy would slow during 2017. He expects that investment will remain weak in the short term, although he also expects a recovery over the medium term.
The Article 50 bill was passed by the Commons last night with no amendments, which provided slight Sterling support. According to a government source, the House of Lords has been warned that its existence will be put at risk if it attempts to block the Brexit bill.
Sterling regained the 1.2500 level against the Dollar while there was little overall change against the Euro. The RICS housing data was slightly stronger than expected with a small increase to 25%, up from 23% last month.
The Euro managed to remain resilient despite fresh concerns over the Eurozone political environment and fears surrounding Greek debt. The weaker tone in risk appetite tended to discourage carry trades and this had a significant impact in shoring up the Euro as selling pressure associated with carry trades declined. German exports weakened in December which may lessen immediate US criticism of the Euro’s price versus the Dollar.
US Fed Presidents Bullard and Evans will deliver noteworthy speeches today, although testimony from Fed Chair Yellen will be much more important next week when she testifies to Congress. Trump’s protectionist moves have caused an increased appetite for safe havens, such as Japanese Yen and gold, and also importantly US Treasury purchases. The consequent fall in Treasury Yields is weakening the Dollar as the currency tends to follow the direction of yields.
Data to watch: 7am German Current Account, Exports, Imports & Trade Balance. 1.30pm US Initial & Continuing Jobless Claims. 6.30pm UK Governor Carney Speech.