This deal or no Brexit at all
Last night, the UK Prime Minister Theresa May managed to secure “legally binding” changes to her Brexit deal which means that the UK would not be trapped in the Irish backstop indefinitely. Markets welcomed this Brexit progress and the pound surged to 1.1767 against EUR and 1.3245 against USD. The Parliament will vote on this deal this evening and if it is rejected a vote on no-deal will take place tomorrow. The rally didn’t last long as in the last hour, the attorney general Geoffrey Cox stated that, despite the “legally binding” changes, the risk of the UK being stuck in the backstop remains. Within minutes, the rate dropped to 1.5 points, now trading at 1.1554 against the EUR and 1.30 against the USD. From an economic point of view, there was still some good news when data released this morning revealed that the UK economy grew 0.5 per cent in January, the fastest monthly growth in two years.
In the US, the Bureau of Labor Statistics will issue today its February consumer price index, which is expected to be 0.2 per cent higher than the flat reading seen in January. Annual prices are expected to be unchanged at 1.6 per cent and the core CPI, excluding food and energy costs, is forecast to be 0.2 per cent higher on the month and 2.2 per cent on the year, both unchanged from January. CPI figures will not move markets so traders are not expecting any major USD moves but they could influence the Fed policy.
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