Political concerns dominated amid reports that Westminster support for the Withdrawal Agreement was fading further.
A lack of confidence in other major currencies helped trigger a sharp dollar recovery in choppy trading on Thursday despite weaker underlying sentiment after the Fed statement.
Political fears undermined Sterling during Thursday and had a negative Euro impact before a tentative recovery on Friday as the EU granted a Brexit extension.
Oil prices were underpinned by tighter supplies but faded slightly after posting fresh 4-month highs.
The Norwegian krone strengthened sharply after a Norges Bank rate hike and hawkish statement.
Expectations of dovish global central bank policies helped underpin global equities.
Precious metals moved lower as the dollar regained ground before a tentative recovery.
Headline UK retail sales increased 0.4% for February compared with consensus forecasts of a 0.4% decline with the year-on-year increase holding at 4.0% from 4.1% previously and government borrowing data remained strong.
The Bank of England maintained interest rates at 0.75% with a 9-0 vote. The bank was slightly more cautious over the economic outlook and reiterated that the outlook was dependent on a smooth Brexit process The committee repeated that gradual and limited interest rate increases were likely over the medium term, but markets remained unconvinced with futures indicating that the chances of a rate hike by December had declined to below 20% and lower gilt yields undermined Sterling.
Political concerns dominated amid reports that Westminster support for the Withdrawal Agreement was fading further and market fears over a ‘no-deal’ outcome increased. GBP/USD dipped sharply to lows just above 1.3000 with GBP/EUR dipping below 1.1500.
After prolonged debate, the EU granted a Brexit extension to May 22nd if the Withdrawal Deal is passed, but only to April 12th if the deal is rejected again. Relief over an extension triggered a Sterling recovery, but Prime Minister May remained under intense pressure amid calls for her to resign and uncertainty remained extremely high. GBP/USD settled around 1.3140 with GBP/EUR around 1.1500 and further choppy trading is inevitable.
Economic Calendar
| Expected | Previous | ||
|---|---|---|---|
| 08:15 | Markit Mfg PMI(MAR) | 51.5 | 51.5 |
| 08:15 | Markit Serv PMI(MAR) | 50.7 | 50.2 |
| 08:30 | EUR German PMI Composite(MAR) | 52.7 | 52.8 |
| 08:30 | EUR German Manufacturing PMI (M/M)(MAR) | 48.1 | 47.6 |
| 08:30 | EUR German PMI Services(MAR) | 54.8 | 55.3 |
| 09:00 | Euro-Zone PMI Manufacturing(MAR) | 49.5 | 49.3 |
| 09:00 | Euro-Zone PMI Composite(MAR) | 52 | 51.9 |
| 09:00 | Euro-Zone PMI Services(MAR) | 52.7 | 52.8 |
| 09:30 | GBP Public Sector Net Borrowing(FEB) | -0.30B | -15.76B |
| 12:30 | CAD CPI (M/M)(FEB) | 0.50% | 0.10% |
| 12:30 | CAD CPI (Y/Y)(FEB) | 1.40% | 1.40% |
| 12:30 | Bank of Canada Core CPI (M/M)(FEB) | - | 0.30% |
| 12:30 | Bank of Canada Core CPI (Y/Y)(FEB) | - | 1.50% |
| 12:30 | CAD Retail Sales Ex Autos (M/M)(JAN) | - | -0.50% |
| 12:30 | CAD Retail Sales (M/M)(JAN) | - | -0.10% |
| 13:45 | USD Markit Services PMI(MAR) | 56.2 | 56 |
| 13:45 | USD Manufacturing PMI(MAR) | 53.5 | 00:00 |
| 14:00 | USD Existing Home Sales(FEB) | 5.10M | 4.94M |
| 14:00 | USD Existing Home Sales Change(FEB) | 2.20% | -1.20% |
| 14:00 | USD Wholesale Inventories(JAN 12) | - | 1.10% |
| 18:00 | Monthly Budget Statement(FEB) | 25.0B | 9.0B |