Week Outlook 15th to the 19th April, 2019.
With the emergency EU summit over, the UK’s exit from the EU now ‘flexibly’ delayed to the end of October, and Parliament in recess, expectations are for a quiet week on the politics front. The immediate risk of a ‘no-deal’ Brexit appears to have been averted, with reports suggesting that Government work preparing for such a scenario has been suspended. However, an extension of the A50 deadline also means an extension of uncertainty, something that has already been seen to weigh on the economy.
Commentators suggest that an extra six months of this situation is unlikely to give much headroom to businesses to kick start investment, nor the BoE to alter policy. Unsurprisingly therefore, markets have (as of now) shown little response to the news.
The week ahead offers few opportunities for BoE speakers to discuss how they view the development. Otherwise, with regards to broader themes for financial markets, worries persist around the strength of global growth and its effect on monetary policy. The IMF, earlier this week, cut its estimates for world GDP growth, reflecting slowdowns in China and the Euro zone, and elevated trade tensions. On that front, though US/China negotiations continue to yield positive soundbites, President Trump’s remarks on unfair European trade practices have generated some fresh concern. Trade data for both countries next week could trigger further comments.