Prolonging the pain
The IMF managing director, Christine Lagarde, held a press conference yesterday to formally open the IMF spring meeting in Washington. According to her, more disciplined tax policy and an end to trade battles that result in “self-inflicted wounds” are now necessary. She even made a comparison with global warming, stating that “Just like nature, the global economy is also currently quite uncertain”. She praised China’s recent stimulus moves and welcomed the fact that the UK won’t be crashing out of the EU without a deal but warned that a Brexit delay means another six months of uncertainty, which will cause damage to UK businesses – “prolonging the pain is not fixing it”.
Although the EU has agreed on the Brexit extension, it reiterated that a renegotiation of the Withdrawal Agreement isn’t possible. However, there is no guarantee that Prime Minister May will receive the necessary support to pass the current Withdrawal Agreement by October 31st. It actually gives the opposition more time to either push for a second referendum, a general election, or PM May’s resignation. This means that investors aren’t reassured and the pound will remain volatile, and potentially weaker. From this morning, traders should see less Brexit headlines as the British parliament is on a recess until April 23rd.
With no major UK economic data up for release today, focus will be on the latest US consumer confidence data, where the preliminary reading is expected to soften to 98.00 from a previous 98.4.
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