It has been a good few days for the pound, but yesterday’s gains were the biggest for some time. The strengthening against the euro and dollar was brought about through a perception that there is a diminished chance of the UK leaving the EU without a deal. Labour has said it will support an amendment to Theresa May’s proposals that would prevent a no-deal Brexit.
The Confederation for British Industry’s business optimism indicators decreased to -23 in the first quarter of 2019, from -16 the previous quarter. It is the lowest reading since the third quarter of 2016 and, unsurprisingly, is because of Brexit uncertainty. It will be interesting to see what the next reading is, especially given that by then we should know far more about the future relationship we can expect with the EU. Industrial trends orders dropped to -1 in January from +8 the previous month and well below expectations of +5. It is the first decline in factory orders after two months of growth.
There are no economic data releases from the UK today, but Brexit-related headlines will no doubt continue to dominate proceedings. It has to be said that the pound has been faring rather well of late, especially given the profound uncertainty which looms large. It appears that the City is expecting a softer Brexit, but the chances of a no deal are preventing any major strengthening.
