Good morning,
GBP: Resignations, cross-party talks and Customs Union debate
The cross-party negotiations will continue today under the careful watch of global markets, with the upbeat mood remaining intact. Yesterday, a YouGov survey revealed that 51% of people were supportive of the talks, which is about as conclusive as the Brexit referendum itself. Unsurprisingly, this cross-party adultery triggered two resignations from Pro-Brexit MPs, Nick Boles and Nigel Adams, conservative MPs for Selby and Aintsy. Whilst there is no guarantee the deadlock will be cracked, the commitment from the PM and the Labour leader finally indicates a willingness to bring these things together.
The EU remains pessimistic, however, and it’s easy to understand why. The UK has had ample time and resources to conclude matters and there still appears to be little in the way of tangible progress. They themselves must also prepare battle plans for a no-deal outcome.
The 22nd May extension remains in-play, but only if May’s withdrawal agreement holds a majority. The House of Commons last night were narrowly successful in agreeing that Theresa May should request an extension from the EU, which won by one vote (313 v 312). GBP remained unchanged following this result, most likely from a behavioural observation that an extra 30 days (vs 1014 days already passed) is unlikely to conclude the deadlock.
Keep an eye on the negotiations today, as MPs debate the Labour focused Customs Union. Will this undermine the Brexit vote?
EUR: ECB minutes
March’s ECB minutes will be available today, which will focus on the new series of targeted long term loans, and (as usual) any indication/forward guidance on rates towards the back end of 2019. Markets remain concerned about negative rates, and the prolonged impact this will be having on EU bank’s balance sheets. EURUSD remains deadlocked at the 1.1230 range and any movements on GBPEUR are coming directly from sterling sentiment.
Have a great day.