Creative solutions and German coalitions

Theresa May spoke in Florence on Friday, outlining Britain’s stance on the divorce and ongoing relationship. She suggested a transition period of “around 2 years” – during which trade continues on current terms. She committed to the UK paying into EU budget during this period, c. 20bln EUR. She said a “Creative solution” should be found regarding a future trade deal, rather than using a deal based on existing agreements with Canada/EEA Membership. Initially the pound softened by 0.7% against EUR but swiftly rebounded.

Previous Day's Market Highlights

Theresa May spoke in Florence on Friday, outlining Britain’s stance on the divorce and ongoing relationship. She suggested a transition period of “around 2 years” – during which trade continues on current terms. She committed to the UK paying into EU budget during this period, c. 20bln EUR. She said a “Creative solution” should be found regarding a future trade deal, rather than using a deal based on existing agreements with Canada/EEA Membership. Initially the pound softened by 0.7% against EUR but swiftly rebounded.

Moody’s downgraded UK credit rating late on Friday who cited a weak outlook for public finances and the rising burden of debt. This saw GBPUSD fall to around 1.3450 & GBPEUR to around 1.1250 in thin trading conditions – which has now corrected to original levels.

Angela Merkel’s CDU party won largest share of vote (33%) – despite this being party’s worst showing in almost 70 years. A coalition now needs to be formed with up to 3 other parties. Far right AfD enter parliament for first time, and the victory was marred by the surge of far-right support.

Currency Pairing 08:00 Today Vs 08:00 Yesterday Four-Week High Four-Week Low % Change
GBP / EUR 1.1321 1.1397 1.0745 5.72%
GBP / USD 1.3491 1.3664 1.2854 5.92%
EUR / USD 1.1928 1.2093 1.1823 2.23%
GBP/AUD 1.6971 1.7006 1.6165 4.95%
GBP / NZD 1.8534 1.8742 1.7755 5.25%
GBP / CAD 1.6641 1.6710 1.5837 5.22%

Today's Market Highlights

Today is a relatively light day for economic data. At 9am, there is a German IFO Business Climate data released which is forecasted at 116 against a previous 115.9. It’s a measure for German economic health and indicates trends for the wider Eurozone.

At 1.30pm, FOMC member Dudley is giving a speech on workforce development, with a Q&A afterwards. At 2pm, ECB president Mario Draghi is speaking before the European Parliament Economic and Monetary Affairs Committee.

After close in Europe today, FOMC members Evans and Kashkari are speaking at 5.30pm and 11.30pm respectively.

Today's Economic Calendar

Time Currency Release Consensus Previous
9:00 EUR GER Business Sentiment Index 115.2 116
22:45 NZD Trade Balance (YoY) 85m