Potential Brexit Progress Support Sterling Exchange Rates
Good morning everyone,
The Telegraph reported that the UK will seek a customs union beyond 2021 and until advanced technology can control borders. More reports have surfaced today suggesting that minsters are said to have signed off on a ‘backstop’ deal to avoid a hard Irish border. This would involve the UK matching EU tariffs after 2020, if there is no deal on their preferred customs arrangements. Positive news around Brexit continues to benefit GBP more than the EUR but traders look wary of buying too much into Sterling without more confirmation on Brexit progress.
Today is a relatively quiet one for new economic data. There are no releases of note in the UK or the US. Meanwhile, March trade data for the Eurozone is expected to show another substantial trade surplus.
There are a number of Fed speakers today who will be watched closely for their reaction to recent moves in both economic data and financial markets. Potentially of most interest are the views of Fed Governor Brainard, although her speech is not supposed to primarily focus on monetary policy. She is considered to be one of the more ‘dovish’ members of the interest rate setting committee so it will be interesting to see whether she drops any hints of how quickly she expects rates to rise.