Political fears undermined Sterling as the government again failed to secure parliamentary support for the Withdrawal Agreement and deadlock continued.
Risk appetite stabilised on Friday and secured a more substantial boost on Monday after two stronger than expected Chinese PMI data releases.
Global bond yields recovered with the US 3-month/10-year curve no longer inverted. Month-end trading tended to underpin equities with gains sustained by firmer global risk conditions on Monday.
The dollar was mixed with slight net trade-weighted losses on Monday despite a lack of underlying Euro support.
Political fears undermined Sterling as the government again failed to secure parliamentary support for the Withdrawal Agreement and deadlock continued.
UK fourth-quarter GDP growth was confirmed at 0.2% with a slight upward revision to 1.4% for year-on-year growth from 1.3% while business investment declined slightly less than expected. Sterling moved sharply higher ahead of the New York open amid reports that the Withdrawal Agreement could be approved as key Conservative MPs moved to back the deal.
Gains faded as expectations of approval faded again and, in the event, there was a defeat by 59 votes. Sterling moved lower following the result with a GBP/USD dip below 1.3000 from earlier highs above 1.3120 before a slight recovery as GBP/EUR held above 1.1600.
CFTC data recorded a further net decline in short, speculative Sterling positions, illustrating that the UK currency will need net buying rather than just short covering to secure gains. Weekend Brexit speculation continued, but with no sign of cohesion and EU pressures were illustrated by Commission President Juncker’s warning that patience was running out.
Another round of parliamentary indicative votes will be held on Monday while firmer risk appetite pushed GBP/USD to around 1.3050.
Economic Calendar
Expected | Previous | ||
---|---|---|---|
07:30 | CHF SVME PMI(MAR) | - | 55.4 |
07:45 | Markit/ADACI Mfg PMI(MAR) | - | 47.7 |
07:50 | Markit Mfg PMI(MAR) | - | - |
07:55 | EUR German Manufacturing PMI (M/M)(MAR) | - | - |
08:00 | Euro-Zone PMI Manufacturing(MAR) | 49.2 | 49.2 |
08:30 | GBP PMI Manufacturing(MAR) | 52 | 52 |
09:00 | Euro-Zone CPI (Y/Y)(MAR) | 1.50% | 1.50% |
09:00 | Unemployment Rate(FEB) | - | 10.50% |
09:00 | Euro-Zone Core CPI (Y/Y) | 1.00% | 1.00% |
12:30 | USD Core Retail Sales (M/M)(FEB) | 0.30% | 0.90% |
12:30 | USD Advance Retail Sales (M/M)(FEB) | 0.30% | 0.20% |
13:30 | CAD RBC Manufacturing PMI(MAR) | - | 52.6 |
13:45 | USD Manufacturing PMI(MAR | - | - |
14:00 | USD Business Inventories(JAN | - | 0.60% |
14:00 | USD Construction Spending (M/M)(FEB) | - | 1.30% |
14:00 | US Manufacturing ISM(M/M)(MAR) | - | 54.2 |
21:00 | NZIER Business Confidence (Q/Q) | - | -17 |