May Announces Plans to Resign

GBP

Last night Theresa May told MP’s she will quit as Prime Minister before the next stage of Brexit negotiations in a last bid attempt to get MPs to back her deal. She said: “I am prepared to leave this job earlier than I intended in order to do what is right for our country and our party". May admitted she had made mistakes as party leader but urged her colleagues to vote for her deal at the third time of asking.

May did not set a specific date for her departure, but if the meaningful vote is passed this week and the UK leaves the EU on May 22, the trade talks are likely to being in October. There are reports that the possible leadership contest could take place throughout June and July with a new leader in place before the summer recess.

Yesterday it was reported that British retail sales fell by their most in 17 months in March, reflecting concern among shoppers about Britain’s unresolved Brexit impasse. The CBI said its monthly sales balance fell to -18, meaning more retailers reported falling than rising sales economists had expected a slightly positive figure of 5. The CBI also stated the gradual pick-up in wages and a weakening of inflation had been helping households but consumer confidence was hit by escalating uncertainty over Brexit and the economy.

EUR

Yesterday ECB President Mario Draghi made further dovish comments on Wednesday, suggesting there could be another delay in hiking interest rates if required. Draghi said that "adjusting our rate forward guidance" is an option to fulfil the bank's inflation target. The ECB has a mandate to ensure price stability with an inflation target of close but below 2 percent. In early March, it announced a delay to a previous plan of increasing rates after the summer, due to weak manufacturing and growth data in the region.

However Draghi also provided a slightly positive tone by saying that a temporary slowdown in the euro zone does not necessarily foreshadow a serious recession in Europe. His comments come after the central bank downgraded its growth projections for the region earlier this month. The euro area is set to grow 1.1 percent this year, down from a December forecast of 1.7 percent.

Key Announcements

12:30 – USD: Initial Jobless Claims (March 22) expected to be higher at 225K from 221K
12:30 – USD: US GDP (Annualized) expected to be lower at 2.4% from 2.6%