Yesterday, the pound was the main loser among the G10 currencies, following comments from the EU Brexit negotiator Barnier, as well as the release of the EU’s treaty on Brexit. Today, attention turns to the second round of Fed Chair Powell’s testimony, as well as the release of the core PCE index for January.
Sterling Comes Under Pressure After EU Treaty and Barnier’s Remarks
Yesterday, the pound was sold off following comments from the EU Brexit negotiator Michel Barnier, as well as the release of the EU’s draft treaty on Brexit. Barnier noted that there are significant divergences between the EU and the UK on the matter of the transition period, and repeated that such a period is not guaranteed. As for the draft, it proposes keeping Northern Ireland in the customs union, under EU rules, in order to avoid a hard Irish border, if alternatives are not found. The response of the UK government was quick, with Prime Minister Theresa May rejecting the draft and saying that “No UK prime minister could ever agree to it”.
Read the full financial markets daily report on JFD Research.