UK Receives Extensions, but EU in Driving Seat22 March 2019 by Dave Evans
Morning Report: 07.00 London
The British pound is slipping slightly lower after a dramatic late evening that saw a recovery of the bulk of yesterday’s losses. The EU granted the UK a Brexit extension, but with very firm strings attached – May has to get her deal through or the extension lasts only until April. This is the same deal that been roundly rejected by MPs at each time of asking. Either Theresa May has to ram through an unpopular deal (unlikely), or make other plans.
The EUR/GBP is slightly lower and some way below yesterday’s highs after the pound recovered on the news that a (limited) extension would be granted. The GBP/USD is nudging higher after the pair finished lower, but above the lows yesterday. The GBP/JPY is mirroring this movement.
Dollar pairs are making small gains across the board after hefty reversals yesterday. The dollar index recovered ground lost on Wednesday after the dovish fed meeting. The EUR/USD reversed nearly all of Wednesday’s gains, with only a small rebound this morning. There were also heavy losses for the EUR/CHF yesterday, with around a third of this move reversing this morning.
The USD/CAD is unchanged after posting gains that wiped out the previous week’s losses. The USD/CHF continues to struggle though on Swiss strength as the Swiss franc continues as the reserve currency of choice.
Yen pairs are mixed, with the USD/JPY unchanged and other yen pairs making only tentative moves.
Coming up today
We have numerous Flash Services and Manufacturing PMI data points this morning, starting with French data at 08.15, German data at 08.30 and manufacturing PMI at 09.00.
Canadian CPI and retail sales are at 12.30.
The USD/CHF has made only moderate gains, despite the dollar’s return to strength yesterday. This speaks to the Swissy’s underlying strength in times of considerable uncertainty.