08/01/2019 - May Steps Up No-Deal Planning

GBP

Yesterday news emerged Prime Minister Theresa May is putting together a cabinet committee to prepare for a no-deal Brexit. Brexit Secretary Stephen Barclay also told lawmakers in the House of Commons the meaningful vote will go ahead next week.

May is setting up a new cabinet committee of 21 ministers focused on no deal planning to be chaired by herself, her spokesman told reporters that it there will be a contingency plan as well as ‘engagement’ with the EU on no-deal planning. A spokesman for May told reports that May contacted EU leaders over the Christmas break to seek further reassurances over the Irish backstop.

European commission spokesman Margaritis Schinas reiterated what all EU leaders have said and the ‘deal on the table is the only deal possible’ and that the bloc is ‘closely’ watching the Brexit developments. Commission president Jean-Claude-Juncker plans to speak to May this week but Schinas said that the deal will not be renegotiated.

Furthermore, Brexit Secretary Stephen Barclay told lawmakers in the house of commons that ‘it’s this government’s intention not to extend article 50’. Extending article 50 would end any chance of a second referendum and would give the UK an extended period of two years to negotiate leaving the EU with a deal.

USD

The US dollar weakened on Monday on growing bets the U.S. central bank will halt its multi-year rate hike cycle. Even after last week’s strong U.S. jobs data for December, market watchers believe the world’s biggest economy is losing momentum. Comments by U.S. Federal Reserve chair Jerome Powell have added to expectations that the central bank may adopt a more cautious outlook. If the Fed holds rates in 2019, analysts see slim chances of further greenback appreciation.

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