Sterling Strength Ends

GBP

Thursday saw the Pound’s week of sustained strength end as Investors paused to assess the continued uncertainty around Brexit and the timing of Britain’s exit. We’ve seen multi-month highs after Theresa May said lawmakers will have the opportunity to vote on a delay to Brexit if her withdrawal agreement does not pass through. Despite the fact that forecasts for a no-deal have significantly lowered, there still remains a high level of uncertainty. The sheer number of possibilities that can still occur are contributing to an environment of sustained volatility. Despite the recent Sterling rally, the downside risks for the pound are still very much in place.

USD

Strong GDP data in the US sent the dollar higher against its major peers yesterday as growth in the world’s largest economy was stronger than expected in the fourth quarter. This comes after a poor week for the greenback with the dollar index falling to a three-week low.

US GDP increased at 2.6 percent for the fourth quarter, beating estimates of a 2.3 percent rise. The US economy grew 2.9 percent in 2018, the best performance since 2015 and improved on the 2.2 percent in 2017. Despite this positive news, investors still believe that the trajectory of Fed policy will remain largely unchanged. The US economy still faces the challenge of slowing global growth and fading fiscal stimulus.

Key Announcements

10:00 – EUR: Core Consumer Price Index (YoY) (Feb); expected to remain at 1.1%
10:00 – EUR: Consumer Price Index (YoY) (Feb); expected to increase to 1.5% from 1.4%
15:00 – USD: ISM Manufacturing PMI; expected to decrease to 55.5 from 56.6