EU nations have agreed in principle a “flextension”, i.e. a 3-month flexible delay, for Brexit until 31 January 2020.
EU Governments will have 24 hours to accept or reject the delay. It comes as MPs prepare to vote on proposals by Boris Johnson for an early general election on 12 December.
The SNP and Lib Dems have also proposed an election on 9 December. The government has not ruled out getting behind that proposal date, if it fails to get its preferred date through the Commons later.
The UK was due to leave the EU on Thursday. But Mr Johnson was required to request an extension after Parliament failed to agree a Brexit deal. The prime minister had repeatedly said the UK would leave on 31 October deadline with or without a deal. However, the law – known as the Benn Act – requires him to accept the EU’s extension offer. Minister Boris Johnson pushes for an election after opponents forced him to request an extension he had vowed never to ask for.
The EUR/USD recorded its first losing week since late September, losing close to 1.0%. The week ahead features eight events.
GBP/USD remains volatile and declined by 1.1% last week. There are only three events in the upcoming week. The impressive pound rally ended last week, as the British parliament voted down a government bill over Brexit.
The week ahead – Flextension until 31st of January agreed by EU
It was a turbulent week in the Brexit saga. The week ahead features the all-important Fed decision, the first read of US GDP for the third quarter, and the Non-Farm Payrolls. Here the highlights for the upcoming week:
- US CB Consumer Confidence: Tuesday (29.10). The Conference Board’s gauge of economic sentiment has dropped off the peak levels but remains elevated. Experts expect that the figure will rise for October from 125.1 to 128.2 points.
- Australian inflation: Wednesday (29.10). Consumer Price Index rose by 0.6% in the second quarter and a slower pace of increase is projected now, 0.5%.
- US ADP Non-Farm Payrolls: Wednesday (30.10). Wednesday is when things get busy. ADP’s jobs report for private sector growth is expected to show an increase of 125K positions in October, down from 135K last time.
- US GDP (first read): Wednesday (30.10)After growing at the “new normal” pace of 2% annualized in the second quarter, economists expect a deceleration to 1.6% in the third quarter.
- Canadian rate decision: Wednesday (30.10) The Bank of Canada has been standing out with optimism for a considerable time, while its peers cut interest rates or at least set out their intentions to doing so. The BOC will likely leave the interest rate unchanged and remain neutral on the next steps, potentially boosting the loonie.
- Fed decision: Wednesday (30.10) The Federal Reserve will likely cut interest rates for the third time in a row.
- Japan rate decision: Thursday (31.10) The Bank of Japan will likely leave interest rates unchanged.
- Euro-zone inflation figures: Thursday (31.10) Core CPI is set to remain unchanged at 1%. If inflation further falls, the euro may struggle.
- US Non-Farm Payrolls: Friday (01.11) The US jobs report is expected to show a significant slowdown in hiring, fewer than 100,000 positions gained in October.Wage growth is forecast to rise by 0.3% after remaining flat in September.
Follow this week’s economic calendar.
PLEASE NOTE The information above is not investment advice.
Sources: Reuters, CNBC, FX street