Brexit Postponement Prospects Support the Pound (Weekly Review)

Among the important events of last week, we’d like to mention the continuing vicissitudes with the UK leaving the European Union scheduled for the end of this month, as well as the ongoing US trade negotiations with the PRC and the US negotiations with the DPRK. Regarding trade negotiations with China, participants in financial markets are still full of optimism, which contributes to the continuation of sales of the Japanese yen, against which the US dollar has risen to the 112th figure. The failure of negotiations with the DPRK did not contribute to "anti-risk" sentiment and, accordingly, the demand for the yen, and only technical factors at this stage can trigger correction from 112.00.

Last week the UK Parliament was to vote on a Brexit deal with the EU. The House of Commons approved a new exit strategy from the EU presented by Theresa May, within which a second vote should be taken on a deal with the EU by March 12. In case of failure of the vote, a decision should be made whether the legislators want a “tough” Brexit or not. In the latter case, a vote on the postponement of the Brexit should be held.

Along with speculations on possible postponement, the British pound throughout the week showed positive tatistics across the entire spectrum of the market, updating this year's highs paired with the USD. However, in the face of uncertainty around Brexit and weak UK macroeconomic indicators, speculators continue to be cautious, and the GBP ended the week, losing some of its achievements. Moderate volatility will remain in the GBP pairs; on downturns, the pound can be bought back, and on the rise - to take profits on longs. News of Brexit will continue to influence its dynamics.

Schedule for this week:

Monday, March 4
09:30 GMT – United Kingdom. Construction Purchasing Managers Index (PMI) (Feb);
10:00 GMT - Eurozone. Producer Price Index (PPI);
15:00 GMT - USA. Construction Spending.

Tuesday, March 5
01:45 GMT - PRC. Caixin Services Purchasing Managers Index (PMI);
03:30 GMT - Australia. Reserve Bank of Australia Interest Rate Decision;
03:30 GMT - Australia. Reserve Bank of Australia Rate Statement;
07:30 GMT – Switzerland. Consumer Price Index (CPI);
08:00 GMT – Germany. Markit Composite Purchasing Managers Index (PMI);
09:00 GMT - Eurozone. Markit Composite Manufacturing Purchasing Managers Index (PMI);
09:30 GMT - United Kingdom. Markit Services Purchasing Managers Index (PMI);
10:00 GMT - Eurozone. Retail Sales;
14:45 GMT - USA. Markit Composite Purchasing Managers Index (PMI);
15:00 GMT - USA. New Home Sales;
15:00 GMT - USA. ISM Services Purchasing Managers Index (PMI);
15:35 GMT – United Kingdom. Bank of England Governor Mark Carney Speaks.

Wednesday, March 6
22:10 GMT - Australia. Reserve Bank of Australia Governor Lowe Speaks;
00:00 GMT – PRC. Producer Price Index (PPI);
00:30 GMT - Australia. GDP (QoQ) (Q4);
01:30 GMT – Japan. Bank of Japan Board Member Harada Speaks;
13:15 GMT - USA. ADP Nonfarm Payrolls;
13:30 GMT - USA. Trade Balance;
15:00 GMT - Canada. Bank of Canada (BOC) Interest Rate Decision;
15:00 GMT - Canada. Bank of Canada (BOC) Rate Statement;
15:00 GMT - Canada. Ivey Purchasing Managers Index (PMI);
15:00 GMT - USA. Factory Orders.

Thursday, March 7 
21:30 GMT - Australia. AiG Construction Index;
23:50 GMT - Japan. Foreign Investments in Japanese Stocks;
23:50 GMT - Japan. Foreign Bonds Buying;
00:30 GMT - Australia. Retail Sales;
00:30 GMT - Australia. Import/Export;
00:30 GMT - Australia. Trade Balance;
10:00 GMT – Eurozone. GDP;
12:30 GMT - USA. Initial Jobless Claims;
12:45 GMT - Eurozone. European Central Bank (ECB) Interest Rate Decision;
13:30 GMT - Eurozone. European Central Bank (ECB) Press Conference and Monetary Policy Statement;
13:30 GMT - USA. Unit Labor Costs;
13:30 GMT - USA. Nonfarm Productivity;
17:15 GMT - USA. FOMC Member Brainard Speaks.

Friday, March 8
23:30 GMT - Japan. Household Spending;
23:50 GMT - Japan. GDP Annual;
02:00 GMT - PRC. Trade Balance;
02:00 GMT - PRC. Import/Export;
07:00 GMT - Germany. Factory Orders;
09:30 GMT – United Kingdom. Industrial Production;
13:30 GMT - USA. Nonfarm Payrolls;
13:30 GMT - USA. Unemployment Rate;
13:30 GMT - USA. Average Hourly Earnings;
13:30 GMT - Canada. Unemployment Rate;
13:30 GMT - Canada. Employment Change;
13:30 GMT - Canada. Average Hourly Earnings.

Author: Anthony Porter, IAFT Analyst