Political fears undermined Sterling with market expectations that the government would not be able to break the deadlock in Friday’s vote.
Confidence in the global growth outlook remained weak on Thursday with only a slight recovery in bond yields.
Overall demand for defensive assets remained firm, but the dollar was the prime beneficiary with strong gains amid a lack of confidence in other major currencies and high yields in relative terms.
Political fears undermined Sterling with market expectations that the government would not be able to break the deadlock in Friday’s vote.
Oil prices were resilient despite dollar strength as supply concerns continued. In contrast, precious metals were subjected to heavy selling with gold sliding well below $1,300 per ounce.
Strong gains in Chinese equities provided an element of relief to risk appetite on Friday. Month-end trading is likely to sustain choppy trading.
Sterling weakened steadily during Thursday with no significant respite amid weaker sentiment. Markets remained uneasy over political developments, especially with on-going deadlock in parliament. There was disappointment that the Northern Ireland DUP again refused to support the government’s deal.
During the New York session, the government announced that it would hold another vote on Friday, but there was an important difference as it would only cover the Withdrawal Agreement and not the political declaration to secure a Brexit extension to May 22nd.
Sterling was also hampered by an underlying lack of confidence in the global growth outlook which drew support into defensive assets. ECB President Draghi also commented that markets were not pricing in the full risk of a ‘no-deal’ Brexit.
Month-end selling was also a potentially negative Sterling factor and GBP/USD dipped to lows below 1.3050 while GBP/EUR fell below 1.1650. Sterling rallied slightly on Friday, but expectations that the government would lose the Brexit vote limited potential support with markets wary over further choppy trading and GBP/USD was held below 1.3100.
Economic Calendar
| Expected | Previous | ||
|---|---|---|---|
| 07:00 | EUR German Retail Sales (M/M)(FEB) | -1.00% | 3.30% |
| 07:00 | EUR German Retail Sales (Y/Y)(FEB) | 2.80% | 2.60% |
| 07:00 | GBP Nationwide House Prices (Y/Y)(MAR) | 0.60% | 0.40% |
| 07:00 | GBP Nationwide House Prices (M/M)(MAR) | 0.00% | -0.10% |
| 08:00 | German Unemployment Rate(M/M)(MAR) | - | 92.4 |
| 08:55 | German Unemployment Rate(M/M)(MAR) | - | -21K |
| 08:55 | German Unemployment Rate(M/M)(MAR) | - | 5.00% |
| 09:30 | GBP Total Business Investment (Q/Q) | - | -1.40% |
| 09:30 | GBP Current Account | - | -26.5B |
| 09:30 | United Kingdom GDP (Y/Y) | - | 1.30% |
| 09:30 | United Kingdom GDP (Q/Q) | - | 0.20% |
| 09:30 | GBP Mortgage Approvals(FEB) | - | 66.77K |
| 09:45 | GBP Net Lending to Individuals (M/M) | 4.6B | 4.6B |
| 09:45 | ECB Benoit Coeure Speaks | - | - |
| 10:00 | Consumer Price Prelim MM(MAR) | 0.30% | 0.10% |
| 10:00 | Consumer Price Prelim YY(MAR) | 1.00% | 1.00% |
| 10:00 | CPI (EU Norm) Prelim MM(MAR) | 2.20% | -0.30% |
| 10:00 | CPI (EU Norm) Prelim YY(MAR) | 1.00% | 1.10% |
| 10:00 | Euro-Zone CPI (Y/Y)(MAR) | - | 1.50% |
| 12:30 | USD PCE Core Price Index(M/M)(JAN) | - | 0.20% |
| 12:30 | USD Personal Income (M/M)(FEB) | 0.30% | -0.10% |
| 12:30 | USD Personal Spending (M/M)(JAN) | - | -0.50% |
| 12:30 | CAD GDP (M/M)(JAN) | - | -0.10% |
| 12:30 | CAD GDP (Y/Y) | 1.50% | 1.10% |
| 13:25 | FOMC member John C. Williams speech | - | - |
| 13:30 | USD PCE Core Price Index (Y/Y)(JAN) | - | 1.90% |
| 13:30 | CAD RMPI (M/M)(FEB) | - | 3.80% |
| 13:45 | USD Chicago PMI(MAR) | 61 | 64.7 |
| 14:00 | USD Michigan Consumer Sentiment(MAR 01) | - | - |
| 14:00 | USD New Home Sales(FEB) | 620M | 607M |
| 14:00 | USD New Home Sales Change(FEB) | 1.30% | -6.90% |
| 14:30 | FOMC Robert Kaplan Speech | - | - |
| 16:00 | FOMC Governor Keith Randal Quarles Speech | - | - |
| 17:00 | USD Baker Hughes US Oil Count | - | 824 |