The pound strengthened on Tuesday off the back of strong economic data. UK employment data (QoQ) released showed the number of people in work in the UK has continued to climb with a record 32.6 million employed between October and December according to ONS. Following on from a record number of people in employment, weekly average earnings increased by 3.4% which is its highest level since March 2011. The employment rate was estimated at 75.8%, higher than the 75.2% a year earlier and is the joint highest figure since comparable estimates began in 1971. Consequently the unemployment rate was little changed in the three month period at 4%, its lowest level since 1975.
Theresa May is set to fly to Brussels today for crunch talks with European commission Jean-Claude Juncker to continue talks over her current Brexit deal. Earlier, Brexit Secretary Stephen Barclay updated Cabinet on talks with the EU’s chief negotiator Michel Barnier. He told the Cabinet that talks over the Irish backstop were ‘productive’ but Mr. Barnier did ‘express concerns’.
Jeremy Corbyn also announced he would be going to Brussels to meet Mr Barnier on Thursday. The Labour leader said they would discuss his party's Brexit proposals - including a permanent customs union and a strong relationship with the single market - and that it was a "necessity" to take no deal off the table. By discussing a permanent customs union agreement, this would be one way around the on-going Irish backstop problem.
Germany’s economic outlook remains weak despite some improvement in investor morale in February, the ZEW institute said on Tuesday, pointing to sluggish demand from abroad and weak industrial production. The German economy being Europe’s largest narrowly avoided recession in the final quarter of last year and researchers believe that they do not expect a rapid recover of the slowing German economy. ZEW president Achim Wambach said the economic situation in Germany has been weak, especially in the manufacturing sector which is one of the main drivers of the German economy. With industrial production remaining weak and foreign demand low, Wambach believes that the German economy is unlikely to improve in the next 6 months. The German Government does expect domestic demand to be the sole drier of growth this year, predicting GDP will expand by 1%.
19.00 - USD: FOMC Meeting Minutes