There’s not much in the way of fundamental economic releases scheduled for today, in part owing to the US observing the annual Presidents’ Day holiday. Protests have been threatened in response to Donald Trump’s declaration of a National Emergency to secure border wall funding. In isolation, this is unlikely to hit the Greenback, but may contribute to more restrained trading in thinner bank holiday markets.
The UK Brexit Secretary meets Michel Barnier in Brussels again today to discuss Brexit, although this may be little more than procedural. The key point in the near-term could well be the UK Attorney General laying out his vision for preventing the country from getting trapped in the Irish border backstop. An accommodating tone here may be sufficient to win over pro-Brexit Conservative MPs, in turn, helping meet the March 29th deadline for Brexit. However, that would also remove the prospect of a delay or even an annulment of Article 50. Such a move may end up being negative for the Pound.
Better-than-expected UK home price data is providing some minor support for the Pound. News flow surrounding Brexit developments continue to be a larger catalyst for Pound movement, particularly with the deadline approaching.
Some downbeat US economic data combined with optimism over trade talks helped deliver upside for the Euro against the Dollar late on Friday, but the pair still printed its worst weekly close in almost 20 months. However, positivity over trade could sour amid suggestions that punitive import tariffs will be levied on European cars shipped to the US.
The Pound gained ground over the Euro at the end of last week amid a worsening economic outlook for the Eurozone. However, upside from here could be limited given Brexit uncertainty and the idea that any hopes of a delay could soon vanish.