On Thursday evening the European Union leaders’ summit resulted in an unconditional two-week extension of Brexit to 12 April. If Theresa May is able to pass her deal in Parliament next week, EU leaders agreed to extend Article 50 to 22 May. By this date, the UK will then need to decide between accepting a longer extension, taking part in the European elections, or leaving the union without a deal. The Prime Minister’s next steps are to build support for her withdrawal agreement ahead of the third “meaningful vote” next week.
Meanwhile Thursday afternoon saw the US Philadelphia Fed Manufacturing Survey rise to a higher-than-forecast 13.7 in March.
The unexpected jump reversed February’s slump (the first negative reading since 2016) and lent the US dollar support.
This figure suggests that US manufacturing is likely to be more resilient to the current global industrial slowdown, and the February reading may have been a temporary slump.
There’s no UK news today, but the US composite PMI could cause US dollar movement.
If the PMI slips as forecast from 55.5 to 55.2 it could see pound US dollar attempt to claw back some of its losses at the end of this week’s session.
However, Brexit pessimism is likely to weigh on the UK currency as the Prime Minister attempts to secure backing for her withdrawal agreement with the risk of a no-deal increasing once again.
Looking ahead to the start of next week, US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin will travel to Beijing for high-level trade talks with Chinese officials.
It has been reported that both sides have made progress on a trade agreement through video conferencing and telephone calls.
However, US officials have been downplaying the possibility of an imminent deal with China.
Ministry spokesman Gao Feng said that Chinese Vice Premier Liu He is due to meet with officials in Washington in early April.
If trade discussions prove successful, risk appetite could increase – reducing demand for the US dollar and potentially supporting the pound US dollar pairing.
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