03/10/16 - Timeline Set For UK Brexit

GBP

Addressing the Conservative conference on Sunday for the first time since becoming Prime Minister, Mrs May made it clear that Britain will leave the EU by 2019 after she announced that she will trigger Article 50 by March next year.  “Brexit should not just prompt us to think about our new relationship with the European Union.”

Mrs May further remarked  “It should make us think about our role in the wider world and he UK" and also insisting that the UK will become “a fully-independent, sovereign country” that will no longer be in the “jurisdiction of the European Court of Justice”, suggesting that Britain is preparing to leave the single market. After the announcement the pound weakened and could come under further selling pressure throughout the week. 

The UK’s current account deficit widened in the second quarter, as the trade gap hit a 2 1/2-year high and Britain continued to record heavy outflows of investment income. The current account gap has been highlighted since Brexit, and some analysts have warned that foreign investors may be less willing to finance the deficit by buying UK assets. Increased concern has contributed to the sharp drop in Sterling since the decision to leave the European Union. A large deficit will keep the country vulnerable to external shocks and changing market sentiment.
 

USD

Across the Atlantic, consumer spending fell in August for the first time in seven months. Income growth also decelerated, as wages and salary gains slowed following four strong months. Inflation showed signs of accelerating, creating mixed signals that could keep the Federal Reserve cautious about raising interest rates.
 

EUR

European stocks came off their session lows on Friday afternoon to trade 0.1 percent higher, but concerns over the systemic risk posed by German banks, and particularly Deutsche Bank, continued to weigh on investor sentiment. Deutsche Bank’s stock and debt have been under pressure after the U.S. this month requested $14 billion to settle an investigation.

Shares of the German lender fell as much as 8.6 percent on Friday, before recovering all of the previous day's losses to close 6.4 percent higher, on speculation that it had reached a deal with the U.S. Department of Justice over its settlement. 
 

Key Announcements

9:30  – GBP : Manufacturing PMI, expected to fall to  52.1 from 53.3
 
15:00 – USD : ISM Manufacturing PMI, expected to increase to 50.4 from 49.4