GBP: Solution in modifying May’s deal
Friday saw the government’s plans for a Brexit withdrawal agreement lose in the House of Commons by 58 votes, the third time that that particular piece of legislation has been defeated.
Today will see MPs once again take control of the debate agenda with indicative votes scheduled on alternative plans. While these have not been explicitly decided as yet, they are likely to involve votes on a customs union and a confirmatory referendum that would include the option to remain within the EU.
Much like the previous set of indicative votes, the government doesn’t have to pay attention to them although should any gain a majority in the house then it would be very difficult for the government to not offer them as amendments to their plans.
April 12th is now No-Deal Day with EU Council President Donald Tusk calling an emergency EU summit on April 10th. The chance of a long extension – and a possible election – have increased markedly in the past week but also has the chance of a No-Deal and it is that risk that we expect sterling to focus on in the coming sessions.
It is going to be difficult for Sterling to add value in these coming days given that backdrop and while the data calendar is busy, the focus is on politics and little else.
CNH: Rebound in manufacturing sentiment
The Chinese yuan and other trade focused currencies – NZD, AUD & SGD – are all higher this morning following two positive pieces of news.
Chinese manufacturing sentiment rebounded in March alongside other key manufacturing indicators in a show of stabilisation for the region. Trade numbers have also improved of late which offers some hope that, should a trade deal be agreed between the US & China, then the worst may be over for the country’s outward-looking industries.
To that point, China also announced that they would continue the suspension of retaliatory tariffs on US car imports as well as agreeing to add the drug fentanyl to the list of banned substances.
AUD: RBA expected to hold
Overnight tonight the Reserve Bank of Australia will meet and decide on their latest interest rate policy. It is widely expected that they will keep rates on hold although weak data and pressures elsewhere in the global economy have heightened the risk that the Bank decides to make borrowing cheaper.
If they hold off then we would expect to walk in tomorrow with a slightly higher AUD although we must be wary of any guidance from the Bank that points to weakness in its future outlook.
Have a great day.