12/02/2019 - GDP Data Weighs Heavy On Sterling

GBP

With 45 days to go until the March 29th Brexit date, Pound Sterling suffered a poor day of trading as weak GDP data and an absence of any breakthrough in the Brexit negotiations weighed heavy on the pound. The UK GDP release was mediocre at best, as GDP grew by 0.2% in Q4 as expected, but yearly growth slowed down to 1.3%, greater than the anticipated 1.4% number. This data shows that Britain’s economy last year grew at is slowest since 2012, with Brexit uncertainty hitting investment and the slowdown accelerating at the end of 2018. This falls in line with recent data that is showing the UK economy slowing into 2019, with businesses and consumers reluctant to spend amidst increased nervousness about Britain’s departure from the European Union.

Later in the day, reports came out that Prime Minister Theresa May will pledge this week to give parliament another chance to voice their opinions on the withdrawal agreement on the 27th of February.

May is due to update Parliament on Wednesday on her progress and then on Thursday will give parliament the chance to express their opinion. A government source stated that May will ask lawmakers on Thursday to reaffirm that they support her bid to renegotiate the Irish backstop, which remains the main bone of contention between Britain and the EU.

USD

The dollar strengthened on Monday as concerns grew that the latest round of U.S.-China talks will not yield a deal before the March deadline. This is the eighth consecutive day of gains, as safe haven currencies are the beneficiaries of investor worries about the fallout from an ongoing trade war and a global economic slowdown.

The talks in Beijing have been a focus for investors, many of whom see little chance of a trade deal being reached and expect an extension of the March 1st deadline for deciding whether to increase tariffs.

Key Announcements

13:00 – GBP: BOE Governor Carney Speech
17:45 – GBP: Federal Reserve Chair Powell Speech