- All change for currency competitors
- Brexit rhetoric continues apace…
- German political problems as “painful” concessions made
- Data to look out for this week
By Killian Greenwood
All change for currency competitors
The Japanese Yen ended last week as the strongest major currency. This was because of the global stock market sell-off. The US Dollar was the second best performer; while the Pound was the weakest, despite the Bank of England’s (BoE) more aggressive stance on accelerated rate hikes. This was prompted by Michel Barnier’s Brexit comments on Friday.
Brexit rhetoric continues apace…
A series of speeches is planned by UK Prime Minister, Theresa May, and her cabinet officials in the coming weeks regarding Brexit. International Development Secretary, Penny Mordaunt, said that "what the public wants is, they want the vision and they want some meat on the bone," and, "and that's what they are going to get." Debate on the topic of whether to stay in the EU customs union has heated up over the past two weeks. Michel Barnier warned on Friday that a transition deal is not a given. May is facing objections from Brexiteers on staying in the custom union. And Mordaunt said that May could face defeat in the House of Commons regarding the kind of Brexit that she wants, if "she's not careful.” None of this has helped Sterling, which has slipped on continuing Brexit negativity.
German political problems as “painful” concessions made
In Germany, Angela Merkel defended her concessions to the Social Democratic Party of Germany (SPD) for reforming the grand coalition. The concessions include handing over the crucial finance ministry. She described those as "painful" concessions and she "understands the disappointment" of her conservatives. In particular, the government's strict fiscal discipline enforced by former finance minister, Wolfgang Schaeuble, could be loosened up. But Merkel said that "we have also approved the policies and the finance minister cannot simply do as he likes." Also, she emphasised that "we need to show that we can start a new team".
Data to look out for this week
Some key economic data to follow this week includes the US Monthly Budget statement for January, taking place this evening.
Tomorrow morning, the UK Consumer Price Index (CPI) will be released in the morning and Japanese Gross Domestic Product (GDP) in the evening – both data releases will be closely watched by the markets.