May publicly rejects EU’s draft Brexit Withdrawal Treaty

Yesterday’s markets

2nd March 2018

  • GBP - Manufacturing PMI
  • USD - Fed Chair Powell Testifies
  • USD - ISM Manufacturing PMI

The European Union released their latest draft of the Brexit Withdrawal Treaty today, which details how Britain should exit the European Union. The document was prepared by the European Commission Task Force and is yet to be agreed with the UK. The treaty mentioned, as expected, that Northern Ireland must stay within the customs union to avoid the need for a hard border with the Republic of Ireland. It also binds the UK with the European Court of Justice rules until 2030. After the release, EU Chief Negotiator, Michel Barnier held a press conference, where he continued to remind the UK, that the transition period is not a given, due to the differences between the two sides. UK Prime Minister, Theresa May rejected the draft in ‘Prime Minister’s Question Time’ saying it threatens the ‘constitutional integrity’ of the United Kingdom.

Today’s markets

1st March 2018

  • GBP - Construction PMI
  • GBP - BOE Gov Carney Speaks
  • GBP - Prime Minister May Speaks

After UK Prime Minister, Theresa May publicly rejected the European Union’s draft Brexit Withdrawal Treaty, the European Council President, Donald Tusk has asked May to propose a better solution. Tusk wants May’s alternative to provide a solution which would be as effective in preventing a hard border in Ireland as the one demanded in the treaty. The treaty requested Northern Ireland stay within the EU’s regulatory regime to avoid the need for a hard border to be placed between Northern Ireland and the Republic of Ireland. However, May insisted this would divide the UK in two and ‘threaten the constitutional integrity of the UK’.  Both May and Tusk are scheduled to meet before tomorrow’s Brexit speech by May.

The Eurozone released their final Manufacturing PMI this morning, which fell for the second month in a row, showing signs that the growth might have reached the peak. The figure still remains above 50 with the latest reading posting 58.5, indicating the sector is still expanding, however two months ago the figure reached its peak of 60.6. The individual readings from Italy and France also fell from the previous month. However, Germany and Spain saw growth. The PMI report showed job growth in this sector had been seen across the Eurozone and the business confidence remains strong despite the drop in the index.

Back in the UK, the UK Manufacturing PMI is forecast to remain relatively stable and post 55.1. Across the pond, Fed Chair, Jerome Powell will be testifying before the Senate Banking Committee on the semi-annual Monetary Policy Report. The ISM Manufacturing PMI will also be released, expected to remain static and post 59.