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March

No deal off the table but Sterling rallied – discuss

Published: Thursday 14 March 2019

  • Chinese data continues to slow
  • Article 50 extension vote this evening
​​By David Johnson

Sterling spiked higher late yesterday after the House of Commons passed a non-binding motion to reject a ‘no-deal’ Brexit under any circumstances. I have to admit, I am a tad baffled by that. There are two sides to any negotiation and one side can’t unilaterally declare that a deal will be done. I can’t believe we voted these muppets into responsible positions. A European Commission spokesperson summed it up; “There are only two ways to leave the EU: with or without a deal. The EU is prepared for both. To take no deal off the table, it is not enough to vote against no deal – you have to agree to a deal. We have agreed a deal with the prime minister and the EU is ready to sign it.”
 
The Pound quickly retreated a little as focus turned to the vote today on whether to ask the EU for an Article 50 extension. Get ready for all the “Ifs”. If a decision is made to seek an extension and, if the EU is open to that, how long should that extension be and what is the outcome Parliament wants from that… if there is any consensus on that at all. Although most would appear to prefer a swift resolution, the reality is that not much will change over the next few months. EU officials are asking for a longer extension which could increase the chances of a soft Brexit or perhaps no Brexit at all.
 
UK Prime Minister, Theresa May, insisted that the votes do not change the fundamental problem. And the only way to rule out no deal is to vote for a deal. She also warned that if MPs do not vote for a Brexit deal soon, she will have to seek a long article 50 extension, which would mean the UK having to take part in the European elections, which would be farcical.

US-China talks going well?
 
President Trump insisted that the trade negotiations with China are “going along well” but he told reports at the White House that “I’m in no rush. I want the deal to be right… I am not in a rush whatsoever. It’s got to be the right deal. It’s got to be a good deal for us and if it’s not, we’re not going to make that deal.” He’s so succinct isn’t he. The Dollar continued to weaken on the news.
 
China will want to get a deal done with the US, though, after Chinese unemployment spiked to 5.3% and industrial production growth slowed to 5.3%. This strongly suggests the Chinese slowdown will extend for longer. In particular, further poor employment data could trigger more forceful measures from the Chinese government to maintain social stability.

Euro in the doldrums
 
German Consumer Price Inflation slipped last month. That doesn’t help the Euro and is just another chink in the EU negotiators’ armour. 
 
Today’s data and debate diary

Later in the day, Canada will release its new housing price index, the US will release New Home Sales, Jobless Claims and the Import Price Index.
 
More importantly for Sterling, yet another uncertain Brexit vote in the UK parliament will be watched closely tonight. 

Have a great Thursday.

Secret 

At a big Yacht Club year-end event, all the guests were seated around large round tables. Marion found herself sitting next to a very attractive man. He was tall, dark, handsome and very well dressed as well as attentive and witty. He asked about her and hardly spoke about himself all night. She was besotted.

Finally, she asked him about what he did for a living. He lowered his voice and said, in a conspiratorial tone, “I work for the government”.

“Doing what?” she asked.

“I am sorry to say I can’t tell you exactly what I do because it is top secret. If I told you, I’d have to kill you.”

She smiled and, pointing across the table at her husband, she said, “Perhaps you could tell him.”

Today's Major Economic Releases

Market BST Data/Event Previous Expected
GBP All Day UK: Parliament Brexit Vote   PASS
CAD 12:30 Canada: National Housing Price Index 0.0% 0.0%
USD 12:30 US: Import Prices -0.5% 0.3%
USD 12:30 US: Unemployment Claims 223k 225k
NZD 21:30 New Zealand: Business Manufacturing Index 53.1 53.1

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