11/02/2019 - Brexit Stalemate Weighs on Sterling

GBP

The pound experienced its worst weekly decline since October, as the stalemate over Brexit weighed heavily on the currency. The pound had started 2019 fairly well as expectations had increased on Britain avoiding a disorderly no-deal Brexit. However, fears have returned to market investors as there is no obvious path to a deal and we are less than two months from the official exit date.

Friday also saw Labour leader Jeremy Corbyn outline the conditions for the main opposition party to support a deal. Corbyn set out five conditions for Labour to support a deal, with the key one being that there be a “permanent and comprehensive” customs union with the bloc, which May has ruled out. The EU on Friday urged May to take hold of this offer in order to break the impasse in negotiations, but this is unlikely as it would reverse May’s position on the nature of Britain’s exit.

The prime minister will return to parliament on February 14th for the next debate on the Brexit negotiations, when lawmakers could again seek to take control of the process away from her. It is likely that a vote on approving the Brexit deal is to come later on in the month.

Key Announcements

09:30 – GBP: Gross Domestic Product (YoY) (Q4); expected to decrease to 1.4% from 1.5%
09:30 – GBP: Gross Domestic Product (QoQ) (Q4); expected to decrease to 0.2% from 0.6%