19/02/2019 - Seven Labour Lawmakers Quit

GBP

Seven Labour lawmakers quit on Monday over leader Jeremy Corbyn’s approach to Brexit and a row over anti-Semitism, saying Britain’s main opposition party had been “hijacked by the machine politics of the hard left”. In a direct challenge to Corbyn, the seven centrist MPs said they were courting others from across parliament to join their group, saying “enough is enough” in keeping silent over their doubts about the Labour leader’s fitness for office.

United by a desire for a second referendum on Britain’s decision to leave the European Union, they acknowledged that their resignations would not change the arithmetic in parliament, where there is as yet no majority for such a vote.

The move underlines the increasing frustration within Labour over Corbyn’s reluctance to change his Brexit strategy - the leftist leader and long-time critic of the EU has stuck to his preference for a new election or his plan to leave the bloc.

EUR

The euro rallied and strengthened on Monday as optimism over a breakthrough in talks to end a U.S.-China trade war encouraged investors.

The euro has been stuck in a trading range against the dollar for several months as growing weakness in the euro zone economy offset dwindling expectations the Federal Reserve will raise U.S. interest rates again this year. But after dropping to a three-month low on Friday, the euro has recovered, helped by improved investor sentiment as hopes rose for an end to the U.S.-China trade conflict after both sides reported progress in talks.

Despite Monday’s gains, traders are betting on a weaker euro in the coming months. They expect the European Central Bank to maintain its easy monetary policy against a backdrop of slow growth, tepid inflation and political uncertainty.

Key Announcements

09.30 – GBP: Average Earning Index QoQ; Forecast at 3.5% against previous of 3.4%