The Pound has begun Friday on the back foot, trading in a tight range against the Euro (GBP/EUR) and the US Dollar (GBP/USD). Theresa May is now looking to get her Brexit deal through parliament once again next week, or risks losing control of the process entirely. There’s no British economic data due out today, leaving the Pound susceptible to geopolitical developments and other market movements.
British Pound Exchange Rate Awaiting Next Brexit Developments
Yesterday, MPs voted in favour for an extension of Article 50 and the British Pound traded sideways overnight before declining in the early hours of this morning. Moreover, an amendment for another Brexit referendum failed by a big majority of 249. Now, Theresa May needs to attempt to get her deal through parliament again next week. Should it go through, a short extension to the Brexit deadline will likely take place to organise the legislation. For that reason, close attention will be paid to the Democratic Unionist Party (DUP) to see if support is offered to May’s deal. However, should it fail for the third time, a longer extension may come into play, but the European Union is expected to determine the length of the extension, most likely at the summit in March.
The Final February figure for Eurozone inflation has reached markets this morning, confirming economist expectations. The February reading on the month came in at 0.30%, while the annual ecostat hit 1.50% on the year, and 1.0% for the core reading.
Meanwhile, investors in the US Dollar will be looking towards today’s Empire Manufacturing, US Industrial Production, and University of Michigan Sentiment data out later in the session. Additionally, developments between China and the US over trade could also be a source of market movement.
Bank of Japan Forecasts Economic Slowdown
In central bank news, the Bank of Japan (BoJ) has become the latest bank to warn that the global economy is experiencing a slowdown. Not only did the central bank downgrade its economic outlook, but it also suggested that the economy could contract for the fifth time in five quarters in Q1.
BoJ Governor Haruhiko Kuroda said:
‘It is true Japan’s exports and output are being affected by lean overseas growth. On the other hand, domestic demand continues to grow. We maintain out baseline that the economy is expanding moderately. It is likely to take longer to achieve our price target. However, the output gap is improving… Most board members think it’s more appropriate to patiently maintain our current stimulus programme.’