It was a relatively quiet start to the week yesterday with GBP/USD and GBP/EUR steadily hovering around Friday’s levels. EUR/USD and GBP/USD moved roughly 0.4% during the European session, whilst GBP/EUR remained stagnant throughout the day. The main news yesterday was that there was no deal Sunday night/Monday morning in Doha to freeze oil production, oil plunged around 7% late on Sunday. This caused a risk-off sentiment that benefited the Yen and sent stocks lower.
Chancellor George Osborne, also weighed in on the Brexit talks, releasing his analysis of the key referendum taking place in June. Osborne was in favour of remaining in the EU, suggesting that Britain will be worse off by £4,300 a year per household if we leave, whilst GDP is expected to post between 3.4% and 4.3% better off in the EU.
Across the pond, New York Federal Reserve Bank President and permanent voting member of the FOMC William Dudley delivered his opening remarks at a conference on trans-Atlantic divergence. Dudley, who is one of the known doves in the committee continued his tone, saying that “policy adjustments are likely to be gradual and cautious, as we continue to face significant uncertainties and the headwinds to growth from the financial crisis have not fully abated.” Although slightly dovish remarks, economists’ are still forecasting another rate hike to occur in June this year.
The economic calendar is jam-packed today. Firstly, Germany are set to post an increase in their ZEW Economic Sentiment to around 8.2 from a previous reading of 4.3. Just after midday, we get an insight into the US housing as the release of Building permits and new housing starts are posted, both are expected to remain in line with previous readings. In the afternoon, the head of the BoE Mark Carney, is set to testify before the Lords economic affairs committee and will have markets watching for any comments relating to the Brexit, or any plans the BoE are possibly looking to take regarding this uncertainty to the UK economy.