Yesterday

• Naturally Brexit was at the forefront of everyone’s thinking yesterday, however there was a raft of UK economic data released yesterday morning and all in all it was pretty positive.
• UK GDP rebounded in January with m/m growth of +0.5%, far exceeding the +0.2% expected and more than reversing the -0.4% decline seen in December. However whilst on the face of it half a percent monthly growth looks great, ultimately it means growth in the three months to January was a fairly sluggish +0.2%.
• UK Manufacturing Production also had a bumper January with growth of +0.8%. That was the first positive print in seven months and smashed the +0.2% forecast. There is however strong evidence of cases up and down the UK whereby companies are stockpiling to protect against a potential no-deal Brexit but the ONS were unable to comment on whether the rise was linked to this.
• Moving quickly onto Brexit, the Pound had of course rallied aggressively Monday evening and continued to trade in the Mid-1.1700’s and Mid-1.3200’s against the Euro and US Dollar respectively yesterday morning. The Pound being underpinned by optimism of a deal following Mrs May’s last gasp trip to Strasbourg to meet with Jean Claude Juncker.
• That optimism however was largely crushed following the Attorney General’s honest assessment of the tweaks to the legal text achieved by Mrs May. AG Geoffrey Cox said that the revised deal with the EU still ultimately gave the UK no legal means of exiting the Irish backstop arrangement if ‘intractable differences’ arose between the UK and the EU.
• Following the AG’s comments the Pound tumbled in FX space, plummeting to a day’s low of 1.3004 against the US Dollar and 1.1555 against the Euro.
• US CPI m/m 0.2% as expected.

Overnight

• UK PM Theresa May’s Brexit Deal suffered a second humiliating defeat in the commons yesterday evening with her deal being rejected by a margin of 391 to 242. Following the AG’s comments around the legality of the deal yesterday afternoon it became fairly clear the deal wouldn’t pass, however this does now leave Mrs May in quite the impossible position with her deal seemingly dead in the water and having burned through a great deal of political will both within her own party and from politicians and officials in Europe.
• As expected following the defeat the house will now vote this evening on whether they wish to block a No-Deal Brexit. Assuming they vote to do so they will follow that up with a vote Thursday evening on whether they wish to delay Article 50, albeit they will of course need the agreement of all EU27 Leaders for any extension to be granted.
• Following Mrs May’s defeat sterling did see some modest gains in FX space with GBP/USD nudging back above the 1.3100 handle and GBP/EUR just shy of the 1.1600 handle. However the defeat was largely expected and so moves were minimal.
• Japan PPI y/y 0.7% 0.8% (0.6% Exp)
• Japan Tertiary Industry Activity m/m +0.4% (-0.3% Exp)

Today

• Brexit is likely to dominate headlines again today with a vote to be held this evening on whether Parliament wishes to block a no-deal Brexit.
• The UK Chancellor will be giving his spring statement at sometime today as well, however it’s worth noting this is not a budget as in years gone by.

Also a couple of key US economic data releases are due at 12.30pm.

 

MAJOR CURRENCY PAIRS
Current at time of distribution

Currency Pair	Interbank Rate	% Change on Day
GBP/EUR	1.1644	+0.54
GBP/USD	1.3151	+0.64
EUR/USD	1.1293	+0.06
AUD/USD	0.7062	-0.26

 

Time (GMT)	Region	Data Release	Forecast	Previous
10.00	EUR	Industrial Production m/m	1.0%	-0.9%
TBC	GBP	Chancellor’s Spring Budget
12.30	USD	Core Durable Goods Orders m/m	0.1%	0.1%
12.30	USD	PPI m/m	0.2%	-0.1%
14.00	USD	Construction Spending m/m	0.4%	-0.6%

---