Euro weakened yesterday evening as hopes on Brexit rose, with EC President Jean-Claude Juncker and Theresa May agreeing to a further legal instrument around the Northern Irish backstop issue. However, we’re none the wiser whether it will be enough to pass through the House of Commons – and it looks to be a rocky time for euro ahead.
If the withdrawal agreement with the new legal instrument doesn’t go through, then we’ll see another vote on Wednesday on leaving without a deal and on Thursday on extending the deadline. All this points to further volatility for the euro.
Meanwhile, German factory production, which had been forecast at +0.5%, came in at -0.8%, not helped by Eurozone uncertainty and fewer orders from China. However, if we remove car production from the calculations, then German industrial production was up 0.5% month on month, in a slightly more positive sign.
