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March 2017

Sterling up with Article 50 imminent

Published: Monday 27 March 2017

  • Sterling up with Article 50 imminent
  • USD weaker as Trump gets stumped
  • EUR-USD highest since December
By David Johnson
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After a very bumpy week, the markets are steeling themselves for another equally exciting one. Britain is set to trigger the legal enactment that starts the negotiations for the UK to leave the EU. The whys and wherefores of the reason for leaving are put to one side as the nitty gritty of the relationship we have with the other 27 members of the EU takes centre stage. Sterling has been strengthening ahead of the Prime Minister’s triggering of Article 50 and there may even be a relief rally when she finally says the words but it will be a volatile week come what may…Theresa May in this instance.
 
That’s not to say this is the only news of the week; we’ll get a swathe of UK data including mortgage approvals, a house price index, the final Gross Domestic Product (GDP) figures for Quarter Four and the government’s current account deficit. All could be influential and, as the recent UK data has often followed a pattern of poor forecast but positive figures, Sterling has the potential to be a superstar this week.
 
After Donald Trump’s humiliating climb down over his much vaunted demolition of ‘Obamacare’, the US Dollar is a little weaker. Trump’s two policy attempts thus far have failed miserably, so his next step needs to be built out of granite or he’ll look very weak indeed. US data this week includes the final figure for Quarter Four GDP growth. That is likely to be in line with previous estimates but there have been surprises in the past. The USD is trading around $1.08 against the Euro; a level we haven’t seen since December and then only fleetingly. A break above here would take us back into a range which has $1.12 at the top.
 
The Euro has regained some strength of late but the weakened USD is flattering the shared European currency. This week brings a blast of speakers from the European Central Bank (ECB) and EU. (There must be a more appropriate collective noun for speakers but I can’t think of one).  We will also get a flurry of business and consumer confidence indices and the final figure for March inflation. All may have an impact but the triggering of Brexit is a negative for the EU that traders haven’t fully priced in as yet and I think that may be important this week.
 
And spring has sprung in the UK, the clocks went forward yesterday morning. I am sorry if I am the first to tell you that. You were probably late to work today if I am. It is also the last week of the month, the last week of the quarter and, for many companies, the last week of the financial year. Could be a doozy.
 

Four rules

 
There are four simple rules to becoming an irreplaceable consultant.
1.       Don’t tell them everything you know.
2.       [Redacted]
3.       Never [Redacted] without first [Redacted] all the financials
4.        Always [Redacted]
 
 

Today's Major Economic Releases
 

Market BST Data/Event Previous Expected
EUR 09:00 EU: German Ifo Business Climate 111.0 111.2
EUR 09:00 EU: M3 Money Supply 4.9% 4.9%
EUR 09:00 EU: Private Loans 2.2% 2.3%
AUD 23:00 Reserve Bank of Australia Assistant Governor Debelle Speaks    

For more information, infographics and the latest currency insights, visit www.halofinancial.com/blog
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