Good morning,
GBP: May loses again as Parliament take back control
Sterling rose last night on another defeat for the government in the House of Commons. MPs will now hold a series of indicative votes on various Brexit outcomes – including a Customs Union, a People’s Vote or Second referendum – to see whether there is a majority in parliament for something that isn’t the Prime Minister’s deal. Experience dictates that no subsequent plan will have majority such is the Pygmalion nature of Brexit. Similarly, there is no guarantee that MPs will vote on something viable with the EU and we could be back to talking about membership of the single market but without the freedom of movement of people.
Regardless, Theresa May has said that she will pay no attention to these indicative votes and without a meaningful vote on her plan this week then April 12th becomes a viable time to start talking about a no-deal outcome once again.
These votes could take place as early as tomorrow and sterling’s path in the coming days will depend on how split the opposition parties are on each indicative vote; all parties allow their members a free vote or will both Labour and the Conservative party whip against another referendum/revocation?
The extension with the EU until April 12th has helped give sterling a little more breathing space but that will run out fairly quickly if Westminster still cannot get it’s act together.
NZD: RBNZ expected to keep things on an even keel
We agree with the consensus in expecting the Reserve Bank of New Zealand to leave its Official Cash Rate unchanged at 1.75% tonight. It is also widely expected that the RBNZ will repeat their plans to keep interest rates as they are through 2019 and 2020 and that the next move in the OCR could either be higher or lower.
NZD is still holding onto the gains afforded to it by last week’s better than expected GDP release but fears over the global economy as a whole will see NZD weaken.
CNH: Trump focus may return
China will keep its currency basically stable at reasonable and balanced levels, People’s Bank of China Vice Governor Pan Gongsheng said overnight. He also added that China will continue to open its financial services sector to foreign investors and companies.
With the publication of the Mueller report and the decision to exonerate the Trump campaign on collusion with Russia, we must keep an eye on newsflow from the US about Chinese trade. Trump seems like the kind of President to take one win and use it as a pressure point on another policy matter.
Have a great day.