21 days to go
It emerged yesterday that the European Union made a new backstop proposal to the UK during talks in Brussels. However, it does not meet UK demands and might still be rejected in Parliament next week. Negotiations are expected to continue today and this weekend to try and break the Brexit impasse. The British Prime Minister Theresa May is expected to say during her visit to Grimsby (North-Eastern England) that, “Just as MPs will face a big choice next week, the EU has to make a choice too”, implying that the EU should consider backing down. There was no major economic data release yesterday and today the calendar will be dominated with US data, mainly the US Non-Farm Payrolls report. It is widely followed by investors and traders as it tracks the condition of the US labour market through figures on job creation, unemployment, average hourly earnings, etc. US job growth is expected to have slowed to 180K from 304K while the average hourly earnings (year-on-year) is expected to have increased to 3.3 per cent from a previous 3.2 per cent and the unemployment rate could drop to 3.9 per cent from 4.0 per cent.
In the EU, the European Central Bank adopted a much more dovish-than-expected tone yesterday at its monetary policy meeting: it stated that interest rates would remain at their present levels “at least through the end of 2019, and in any case for as long as necessary”. Moreover, the ECB announced fresh loans to Euro zone banks in an attempt to boost the economy and slashed its growth forecasts, pushing government bond yields lower and driving down the euro. The ECB President Mario Draghi stated that the Euro zone economy should expand only 1.1 per cent this year, compared to 1.7 per cent predicted in a forecast published just three months ago. As a result, the EUR/USD pair reached a a 20-month low and is still trading below 1.1250.
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