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March 2017

Sterling slips ahead of Article 50 trigger

Published: Wednesday 29 March 2017

  • Sterling slips ahead of Article 50 trigger
  • US data improves and USD does likewise
By David Johnson
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US consumer confidence rose significantly in March. At 125.6, it is the highest level since December 2000 and well above any forecasts. Add to that the annual rise in house prices of 5.7% – also above expectation – and there is every reason to see US Dollar strength. That strength may also come from the triggering of Article 50 by the UK.
 
Sir Tim Barrow, Britain’s permanent representative to the European Union, will deliver the letter notifying Donald Tusk, the president of the European Council, that Britain is to leave the EU in two years. Let the negotiations begin! Sterling had been rising ahead of this event, but slipped overnight as it dawned on traders that the big day had arrived. The confirmation of the event could well return some strength in the Pound but uncertainty is still a nerve racking experience for investors, so volatile trading conditions are kind of inevitable over the next 48 hours.
 
If you have a currency requirement, placing an automated order trying to target rates above or below the current market level is an eminently sensible thing to do at a time when volatility is so widely expected.
 
I should mention that we will get UK mortgage lending data this morning and that is expected to be positive, but it’ll be lost in the melee of traders setting themselves up to take advantage of or protect against today’s announcement.
 
Sadly, that is about all of the tier one data we expect today. We will get a couple of speeches from Federal Reserve members in the US and a speech from a member of the European Central Bank, but these are unlikely to be market moving.  By way of contrast, Thursday offers a swathe of data from across the globe – and that will be influential as we approach the end of the month, the quarter and the financial year in many corporates.
 

Thought for the day

 
You’ll never know how many people you dislike until you have to choose your baby’s name.

 

Today's Major Economic Releases
 

Market BST Data/Event Previous Expected
ALL All Day UK: Theresa May to trigger Brexit    
GBP 09:30 UK: Net Lending to Individuals 4.8b 4.9b
GBP 09:30 UK: Mortgage Approvals 70k 70k
USD 15:00 US: Pending Home Sales -2.8% 2.3%
USD 15:30 US: Crude Oil Inventories 5.0m 1.2m

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