Sterling traded above €1.7000 and $1.3150 yesterday, 1 April as markets digested confidence data from the manufacturing sectors in the UK and the Eurozone.
UK Purchasing Manager’s Index (PMI) data showed confidence in the British manufacturing sector is at its highest level for 12 months, with a reading of 55.1. The reading above 50 shows expansion. However, confidence has dropped across Europe to its lowest level for six years as the concerns of a slowdown in global growth continue to hit German factories. The Eurozone’s figures dropped to 47.5 as Germany is weighing heavily on the single bloc. The reading for Europe’s biggest economy has plunged to 44.1.
The divergence in confidence has been attributed to UK factories stockpiling for fear of a no-deal Brexit and an increase in British export orders as customers are looking to take advantage of the cheap Pound.
UK Members of Parliament (MPs) took temporary control of the House of Commons yesterday for a second day of debate and indicative voting on potential Brexit scenarios. None of the four possible outcomes put to Parliament garnered a majority. But the motion to commit to stay in a customs union was the closest to succeeding, losing out by three votes (276 to 273).
Theresa May will meet with her Cabinet this morning at 09:00 (GMT) to find a route through the Brexit maze, with a fourth vote on her Brexit withdrawal agreement on the agenda. If this were to fail, and Parliament does not reach consensus on the direction, the risk of departing the European Union without a deal could weigh on Sterling.
With little top-tier data released today, Brexit will continue to dictate the market direction.
Brexit: May loses again, what’s next?
German manufacturing data fuels fears of a global slowdown
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