Focus will shift to the United Kingdom this week as the Brexit deadline inches closer. The Brexit saga continues relentlessly.
Economic data from the UK is thin so traders may better focus on the Brexit progress. So far, the last-minute push seems to have yielded results for Prime Minister Boris Johnson. The British government insisted on Sunday the country will leave the European Union on Oct. 31. However, the parliament forced Prime Minister Boris Johnson to send a letter to the bloc requesting a Brexit delay.
Despite the Brexit drama, the pound extended its gains and hit the highest since mid-May. GBP/USD posted sharp gains for a second straight week, as the pair jumped 2.6%. On Monday, sterling reached its highest in more than five months at $1.3011 on Monday, as more investors rushed to cover short positions.
The EUR/USD jumped 1.2% last week, as the euro took advantage of weakness in the U.S. dollar.
Dollar/Yen showed little movement last week, as the pair paused after showing strong volatility in the two previous weeks.
START TRADINGThe week ahead – Brexit saga has no end
- Canada Elections: Canadians vote on Monday (21.10) to determine whether Prime Minister Justin Trudeau will remain in power after two major scandals. The results are due early on Tuesday. Markets will probably be content if either leader achieves a majority in the 338-seat parliament. The Canadian dollar may struggle if neither party wins a majority. It is likely that the Canadian dollar will be ignoring the economic releases in the backdrop of the Federal elections.
- On Tuesday (22.10) US Existing Home Sales data are due. The annualized volume of sales advanced in August to 5.49 million. Another rise may be seen in the figures for September.
- On Thursday (24.10) France, Germany and Euro-zone will release their Consumer Prices Indexes, particularly the initial releases for services and manufacturing PMIs. In France, both PMIs dipped in August, while experts expect the data to remain unchanged in September. Germany’s manufacturing PMI slipped to 41.1, pointing to deep contraction and the estimate for September stands at 52.0. The services PMI dropped to 52.5 points and experts expect to dip to 52.0. The eurozone releases mirrored the German data. The manufacturing PMI is forecast to improve to 46.0. The services PMI estimate stands at 51.9.
- The ECB is expected to maintain monetary policy and keep the main financing rate pegged at 0.00% at Thursday’s ECB Rate Decision. Mario Draghi’s tenure at the ECB draws to a close at the end of October. Investors aren’t expecting any significant remarks from the ECB chair. The European Central Bank will likely leave its policy unchanged at President Mario Draghi’s last meeting.
Follow this week’s economic calendar.
PLEASE NOTE The information above is not investment advice.
Sources: Reuters, CNBC, FX street