- Watch out for a hive of central bank activity
- Brexit tensions could weigh on Pound
- Euro stuck in the middle as German coalition deadline not met
By Jonathan Russel
Watch out for a hive of central bank activity
Ahead of a busy week on the calendar the Pound was treading water during early trading so far. Three central banks will meet this week, Reserve Bank of Australia (RBA), Reserve Bank of New Zealand (RBNZ) and Bank of England (BoE). All are expected to keep monetary policies unchanged. The BoE will be the major focus with the quarterly Inflation Report featured. It is likely that they will leave rates at 0.5%, however rates are forecast to rise later in the year. 13 out of 32 economists predicted the next rate hike will be some time in May while as many predicted it to happen in August.
Brexit tensions could weigh on Pound
EU Brexit negotiator Michel Barnier will meet with UK Prime Minister Theresa May and Brexit Secretary David Davis in Downing Street today. Tensions intensified last week on the topic of whether the UK will stay in the EU customs union, or just strike some custom arrangements. There are criticisms of the Cabinet being vague and divided, with May sticking to one policy, while the Chancellor backs another. It’s clear that there are major divisions within the cabinet and if this manifests into a wider leadership challenge, Sterling will certainly take a hit.
Euro stuck in the middle as German coalition deadline not met
In Germany, Chancellor Merkel's CDU/CSU and the Social Democrats couldn't conclude the coalition negotiations in time to meet the self-imposed deadline of Sunday. The negotiations will move forward today as both parties show optimism that a settlement can be reached. The single currency remains range bound for the time being.
Key economic data released this week
There is also some important economic data to watch, including the UK Services Purchasing Manager’s Index, the US Institute of Supply Management (ISM) Services figures, Australian Retail Sales and New Zealand employment data. These will all be very closely watched.