Brexit Talks Continue To Dominate
7 March, 2018
Sterling struggled yesterday as investor sentiment continued to shy away from the pound in the face of Brexit concerns.
Markets see Theresa May struggling to please everyone as the different viewpoints and concerns seem to be unsolvable. The opposing interests of the EU, soft Brexit and hard Brexit members of the Conservatives Party, who are becoming increasingly frustrated at the lack of progress. With this in mind and no light at the end of the tunnel, it seems analysts see any gains made by the pound could easily go into a reversal trend.
This point was tested out yesterday ahead of a speech by the chief economist of the Bank of England in the evening as we saw sterling/euro fall back further by another half a cent. Even against the struggling dollar the pound failed to hold the cent gains of earlier in the day, dropping back half a cent as trading closed.
The weaker dollar was seen as an offshoot of risk appetite following developments in the Korean peninsula. It was reported that North Korea would look at halting their nuclear program if they could progress with trade and sanctions talks with its southern neighbours. With this positive rhetoric, investor sentiment drifted towards a riskier stance, as we saw a sell-off of the safe haven US dollar. Against the euro, the dollar slid back to its lowest level in over 2 weeks, which is close to the lowest levels seen for the USD/EUR pairing since 2014.
So despite deadlock in Italy, the euro was again the winner yesterday and today the EU kicks off with its latest GDP reading. Expected to remain level from last month, should it manage to show some growth, we would expect to see some major movement for the single currency and with a lack of anything UK based, those looking to send money to Spain, or buy property in Portugal, should be aware the rates could well continue to get worse.
After lunch, we see some key releases from the US including trade balance and jobs data alongside Canadian trade and jobs data at 1.30pm, followed by the Canadian interest rate decision at 3 pm.
Anyone looking to send money to Canada should take note and speak to one of the team early doors just in case we see any surprise rate increases and the Loonie makes hay.