Back to Brussels
Today, Brexit Secretary Steve Barclay and Attorney General Geoffrey Cox are in Brussels to negotiate legally binding changes to the Irish backstop. If they succeed, Prime Minister May’s deal will have a chance of being accepted by Parliament next week. If they fail, Brexit will most likely be delayed, causing more uncertainty, which will weigh on the UK currency. Sterling received a boost this morning on the back of better than expected UK services PMI for February, which came in at 51.3, up from 50.1 in January. This afternoon, the focus will be on the Bank of England Governor Mark Carney, who is due to testify before the House of Lords Economic Affairs Committee.
The US dollar quickly recovered its losses yesterday, which were originally caused by President Trump’s complaint that the US currency is currently too strong. As much as the US President would like to be able to influence it, he isn’t in charge of the Fed’s monetary policy and therefore doesn’t have as much influence on the value of the currency as Federal Reserve Chair Jerome Powell does. The EUR/USD pair fell yesterday to its lowest in over two weeks, near 1.1309 and the single currency remains weak, despite the improvement in the Eurozone Sentix Investor Confidence for March: the index rose to a higher-than-forecast -2.2 from a previous -3.7, meaning “there are increasing signs of an economic stabilisation in the eurozone” and that “a ray of hope emerges when looking at the economic expectations” but the research house Sentix added that “it is too early to give the all clear”.
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