Good morning,
GBP: Postponement signed off by EU
Last night the EU granted the UK two options. The first is a very short unconditional extension of two weeks until 12th April.
The shelf-life of political commentary is at an all-time low. When the negotiation process started, we were dealing with blocks of time measured in months. This shrank to weeks, and then days, and now we are watching everything unfold hour-by-hour. Comments from Parliament yesterday are already in the bin and new plans are being drawn up as we speak.
The Pound is trading slightly higher off the back of this current extension. There is also chatter of using the 22nd May as the next deadline, but only if the Commons can agree and vote on an amended Withdrawal agreement (currently blocked by Speaker Bercow). If Parliament rejects the deal again, then it is likely that the UK will leave on 12th April without a deal. At a high level, not much has changed from yesterday, the No-Deal outcome is still a possibility, we still lack the political majority needed to pass the Brexit agreement and we still have an end date to work towards.
Yesterday, the Bank of England’s interest rate update almost flew under the radar, with the same scripted update on holding rates whilst generic Brexit uncertainties cloud the water.
USD: PMI focus
Today we have US Markit PMI for March which will draw more attention than usual given the Fed’s most recent positioning on economic momentum.
Despite the Dovish tilt, the market is still pricing in a slight beat on the data, looking at 53.5 / 54 versus 53 during February.
Have a good weekend.