The Pound retraced from its weekly high of $1.3106 last night as the credit rating agency Fitch put the UK’s AA rating on negative watch due to the many unknowns about Brexit. Britain faces a likely downgrade if it leaves the European Union without a deal or the 29 March deadline gets extended.
However, Sterling had a boost after Spain’s Foreign Minister Josep Borrell told Bloomberg that a Brexit withdrawal agreement “is being hammered out”. Prime Minister Theresa May and European Commission President Jean-Claude Juncker had a “constructive” discussion and agreed that the Irish backstop would only be temporary. That said, EU chief negotiator Michel Barnier ruled out the reopening of the withdrawal agreement to add legally binding language.
Overnight, the US Federal Reserve (Fed) released its January meeting minutes, suggesting the US economy and labour market remained strong, reigniting a possibility of at least one more interest rate increase this year, if the data remained strong. The minutes gave the Dollar some momentum, which gained 0.17 per cent.
Focus today will be on the European Purchasing Managers’ Index (PMI). A leading indicator of economic health, today’s PMI data will provide insight into the confidence levels among European businesses. The expectation is that PMI will improve on last month’s read of 50.7, with the composite figure across all sectors expected to come in at 51.1. A read above 50 indicates expansion.
Sterling rallies on positivity over May-Juncker meeting
Brexit talks to dominate headlines as UK looks for concessions
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