Brexit Headlines Weigh on Pound

Sterling saw pressure on Brexit headlines yesterday. US data and speakers will drive the afternoon session.

Previous Day's Market Highlights

Brexit uncertainties, particularly over the Irish border and a transition period, came into renewed focus with the release of the EU’s draft withdrawal treaty. Over 24 hours from 8am GMT yesterday, the pound fell around 0.9% against the euro and 1.1% against the dollar. When compared to late January highs, the rates are down around 2% and 4%, respectively.
 
As for yesterday’s economic releases, preliminary figures found that inflation in the Eurozone slowed to 1.2% in February while core inflation unexpectedly held steady at 1.0%. As a point of comparison, CPI hit 2% last February, before slowing back down to current levels. In the US, Q4 GDP was revised down a touch to 2.5%, in line with expectations.

Currency Pairing 08:00 Today Vs 08:00 Yesterday Four-Week High Four-Week Low % Change
GBP/EUR 1.1269 1.1474 1.1210 2.30%
GBP/USD 1.3749 1.4279 1.3763 3.61%
EUR/USD 1.2200 1.2556 1.2206 2.79%
GBP/AUD 1.7790 1.7999 1.7436 3.13%
GBP/NZD 1.9068 1.9456 1.8942 2.64%
GBP/CAD 1.7644 1.7806 1.7343 2.60%

Today's Market Highlights

The pound and the euro are in focus this morning. Brexit headlines remain a downside risk, while the UK releases its main data point of the week, the Manufacturing PMI (09:30 GMT). A slight downtick is forecast, but a limited move above the 50 mark, which indicates industry expansion, may have little market impact. The Eurozone Unemployment Rate is expected to dip to 8.6% from 8.7%, but again the impact may be limited.
 
It’s a busy afternoon for the dollar, which sees several releases as well as the second day of testimony from Fed Chair Powell—unlikely to be much changed from earlier in the week, but some additional nuance could be gained—and a speech from Fed member Dudley. Key economic releases include PCE and Manufacturing PMI figures, any dips in which could put pressure on the dollar.
 
Looking further ahead this month, the euro could see some political risk around Italy’s elections on Sunday, while central banks are in focus again with the ECB meeting on 8 March, the Fed on the 21st, and the BoE on the 22nd. Brexit will remain in focus ahead of the EU Summit, also on 22 March.

Today's Economic Calendar

Time Currency Release Consensus Previous
09:30 GBP Markit Manufacturing PMI (Feb) 55.0 55.3
09:30 GBP Consumer Credit (Jan) £1.40B £1.52B
10:00 EUR Unemployment Rate (Jan) 8.6% 8.7%
13:30 USD Personal Consumption Expenditures YoY (Jan) 1.6% 1.7%
13:30 USD Personal Income MoM (Jan) 0.3% 0.4%
13:30 USD Personal Spending (Jan) 0.2% 0.4%
13:30 USD Initial Jobless Claims (16 Feb) 226K 222K
15:00 USD Fed's Powell Speaks
15:00 USD ISM Manufacturing PMI (Feb) 58.7 59.1
16:00 USD Fed's Dudley Speaks

Caxton