Cabinet Resignations throw Brexit Deadline into Doubt

Sterling continues to weaken amid threat of further cabinet resignations ahead of a busy week for economic data.

Previous Day's Market Highlights

Sterling had a strong start to trading against the major currencies on Friday due to the GDP data being as forecast at 0.6% (q/q) and well above the previous 0.4%. This is a good indication that the economy is moving in the right direction. The main focus in the morning was its steady gains on the euro and dollar. We also had industrial production data released from the UK which was above forecast, although not as crucial for the markets.
 
The trend turned against sterling in the afternoon, as it declined steeply against both USD and EUR due to Joe Johnson's resignation from the cabinet due to his opinion on the failure of Brexit negotiations. The DUP have also stated that they are not supporting the current Brexit plan. The concern remains as to whether there will be further ministers resigning. On top of this we had data from the US in the afternoon that was strong - PPI and Consumer sentiment survey above the target rate which further weakened sterling against the dollar. We closed around 0.3% lower than the open on GBP/USD and 0.5% lower on GBP/EUR after the afternoon's events.

Currency Pairing 08:00 Today Vs 08:00 Yesterday Four-Week High Four-Week Low % Change
GBP/EUR 1.1418 1.1506 1.1172 2.90%
GBP/USD 1.2857 1.3236 1.2691 4.12%
EUR/USD 1.1259 1.1621 1.1256 3.14%
GBP/AUD 1.7869 1.8563 1.7857 3.80%
GBP/NZD 1.9155 2.0101 1.9139 4.79%
GBP/CAD 1.6974 1.7189 1.6637 3.21%

Today's Market Highlights

Monday is a very quiet day for data, mainly due to Veterans Day in the US. The only macroeconomic highlight is Italian industrial production. Therefore, all eyes will remain on any political news following the resignation of Joe Johnson last week and the skepticism from the DUP.
 
Looking onward to later in the week we have German CPI data and UK Unemployment data from the UK on Tuesday, as well as Japan’s GDP. Later on in the week we have various CPI figures from a range of European countries including France and GDP from Germany and the Eurozone as a whole. On top of this we have US CPI.
 
The back end of the week is also fairly data heavy with UK retail sales and unemployment claims on Thursday added with US retail sales. We then look into Friday for EUR CPI and US industrial production to round off the week. In addition to all of the data being released this week, the FX traders will be on the lookout for any further political uncertainty or speculation of further resignations.

Today's Economic Calendar

Time Currency Release Consensus Previous
9:00am EUR Italian Industrial Production m/m -0.5% 1.7%