No-Deal Tariffs In Place

GBP

Yesterday Trade minister Liam Fox told lawmakers that senior ministers had reached a “basic agreement” on the extent to which it would impose reciprocal tariffs on European Union goods if it leaves the bloc without a deal on March 29. With the details not finalised, Fox said there was no agreement on whether to tell parliament before it must decide on March 12 whether to accept an unpopular exit agreement negotiated with the EU by Prime Minister Theresa May.

Nicky Morgan, a Conservative lawmaker who chairs parliament’s Treasury Committee, said it was unacceptable to keep parliament in the dark and called on the finance ministry to divulge full details before next week’s vote.

The Bank of England is likely to take a wait and see approach to how Brexit unfolds before shifting its policy stance, given inflation is “reasonably well behaved” and growth modest, rate-setter Michael Saunders said on Wednesday. “The possibility that monetary tightening might be needed in the future does not necessarily mean we need to tighten now,” Saunders said.

While a smooth Brexit would probably mean the BoE would need to deliver a limited and gradual round of interest rate hikes, Saunders stated that there remains a range of scenarios that have different implications for monetary policy.

Key Announcements

GBP - 10:00: Eurozone GDP Q4 (qoq) GDP expected to be 0.2%
EUR - 12:45: ECB Interest Rate Decision – Expected to be unchanged at 0%
EUR - 13:30: ECB Monetary Policy and Press Conference
USD -13:30: Intial Jobless Claims (Feb 25) Expected to be unchanged at 225K