House of Commons to vote on the EU Customs Union this week
What’s been happening?
UK: Cable (GBP/USD) has seen a decline, as the pound continues to be sold. The key event this week will be Thursday’s vote in the House of Commons, regarding the UK’s access to the EU Customs Union following the UK’s departure from Europe. The government has dismissed the vote previously, outlining a firm commitment to leave the Customs Union, allowing the UK to focus on forming its own trade agreements. This, along with the anticipated GDP figure coming out on Friday, are the key events that have the potential to impact the pound further during this week of sterling weakness.
EU: A ray of light shone through the euro clouds yesterday, as the eurozone PMI beat expectations. The printing of a PMI figure above 50 most definitely shows clear expansion, however the 55 reading did little to advance the euro in the face of a strong US dollar. The mixed bag of EU data has continued over this week, with German IFO figures this morning failing to meet those expected. Although only slightly under the forecast figure, such readings further compound the economic struggles that Europe is facing at present. Investors brace themselves for the big event this week, when the ECB meets on Thursday. Meanwhile, Germany and France seem to share the need to stand united to in an effort to reform the EU. If this does not transpire ahead of the EU leaders meeting this June, the euro has a chance to weaken if divide amongst the euro nations continues.
US: The dollar seems to have been bought across the board overnight. US treasury yields have risen, and the dollar is at its highest level since the beginning of 2018. If we see a bullish GDP figure out of the States on Friday this week, we could be in for further dollar strengthening that will test new trading ranges.
What’s coming up?
UK: The key data coming out this week will be on Friday, where we will see the latest GDP figures revealed. The markets will also be keeping a close eye on the vote that will be taking place in the House of Commons on Thursday, regarding the EU Customs Union. Both of these events have the potential to influence the pound.
EU: The ECB’s decision on interest rates will be revealed on Thursday, which will then be followed by Mario Draghi’s press conference. France’s GDP will be released early morning on Friday.
US: The key data coming out from the US today will come in the form of Consumer Confidence, which is expected to be slightly weaker than the previous month reading of 1.27.7.
Early this morning consumer prices in Australia came in slightly lower than expected, printing a positive 0.4% against the expected positive 0.5%. Transport and housing costs have increased at a slightly softer pace, while clothing and household equipment are continuing to fall. The Aussie is down to it’s lowest level in four months versus the greenback, seeing AUD fall by 0.7%, and trading at its lowest level since Dec 2017. It is a bank holiday in both Australia and New Zealand tomorrow, hence markets for AUD an NZD could be flat.