- US equities hold onto record gains
- Parliament backs the UK Government’s timetable for Brexit
- ECB monetary policy meeting in focus today
US equities continued to hold onto their ‘post-Trump’ record gains with the S&P 500 rising c.1.4% in yesterday trading to post a record high alongside the Dow Jones. Markets also saw a strong showing from European equities ahead of today’s ECB meeting, whilst the EURUSD jumped back to post-Italian referendum highs.
In UK politics, Theresa May won the backing of MPs for her timetable to start Brexit talks in March 2017 after agreeing to publish a plan setting out her objectives and promising MPs a vote on the final “divorce deal”. While the Supreme Court appeal on Article 50 continues, the ease with which this bill was passed perhaps suggests, in our view, that the Government is unlikely to face problems with triggering Article 50 regardless of the Supreme Court appeal outcome.
Sterling appears to be consolidating towards the bottom end of recent ranges after a softer November IP print of -1.3% mm (vs. consensus 0.2%). EURGBP traded up to a high of 0.8550 whilst GBPUSD held support at 1.2560. Our traders are of the view that GBPUSD can drift back towards Tuesday’s high of 1.2775 as the USD block starts to meet resistance.
Markets are focused on the ECB monetary policy meeting today. Barclays Research “…expects the ECB to announce a six-month extension of its EUR80bn Asset Purchase Programme (APP)… Critically, although the Governing Council may also discuss a reduction in the pace of monthly purchases in 2017, we do not think an announcement on a reduction of monthly purchases is likely. Instead, we expect such a decision to be postponed at least until March 2017…
Our traders think that any explicit reduction in pace or duration of APP less than 6 months would be EURUSD positive
Todays’ currency rates:
GBPUSD = 1.2644
GBPEUR = 1.1731
EURUSD = 1.0778
GBPAUD = 1.6860
EURGBP = 0.8524