Political concerns dominated amid reports that Westminster support for the Withdrawal Agreement was fading further.

A lack of confidence in other major currencies helped trigger a sharp dollar recovery in choppy trading on Thursday despite weaker underlying sentiment after the Fed statement.

Political fears undermined Sterling during Thursday and had a negative Euro impact before a tentative recovery on Friday as the EU granted a Brexit extension.

Oil prices were underpinned by tighter supplies but faded slightly after posting fresh 4-month highs.

The Norwegian krone strengthened sharply after a Norges Bank rate hike and hawkish statement.

Expectations of dovish global central bank policies helped underpin global equities.

Precious metals moved lower as the dollar regained ground before a tentative recovery.

Headline UK retail sales increased 0.4% for February compared with consensus forecasts of a 0.4% decline with the year-on-year increase holding at 4.0% from 4.1% previously and government borrowing data remained strong.

The Bank of England maintained interest rates at 0.75% with a 9-0 vote. The bank was slightly more cautious over the economic outlook and reiterated that the outlook was dependent on a smooth Brexit process The committee repeated that gradual and limited interest rate increases were likely over the medium term, but markets remained unconvinced with futures indicating that the chances of a rate hike by December had declined to below 20% and lower gilt yields undermined Sterling.

Political concerns dominated amid reports that Westminster support for the Withdrawal Agreement was fading further and market fears over a ‘no-deal’ outcome increased. GBP/USD dipped sharply to lows just above 1.3000 with GBP/EUR dipping below 1.1500.

After prolonged debate, the EU granted a Brexit extension to May 22nd if the Withdrawal Deal is passed, but only to April 12th if the deal is rejected again. Relief over an extension triggered a Sterling recovery, but Prime Minister May remained under intense pressure amid calls for her to resign and uncertainty remained extremely high. GBP/USD settled around 1.3140 with GBP/EUR around 1.1500 and further choppy trading is inevitable.

Economic Calendar

Expected Previous
08:15 Markit Mfg PMI(MAR) 51.5 51.5
08:15 Markit Serv PMI(MAR) 50.7 50.2
08:30 EUR German PMI Composite(MAR) 52.7 52.8
08:30 EUR German Manufacturing PMI (M/M)(MAR) 48.1 47.6
08:30 EUR German PMI Services(MAR) 54.8 55.3
09:00 Euro-Zone PMI Manufacturing(MAR) 49.5 49.3
09:00 Euro-Zone PMI Composite(MAR) 52 51.9
09:00 Euro-Zone PMI Services(MAR) 52.7 52.8
09:30 GBP Public Sector Net Borrowing(FEB) -0.30B -15.76B
12:30 CAD CPI (M/M)(FEB) 0.50% 0.10%
12:30 CAD CPI (Y/Y)(FEB) 1.40% 1.40%
12:30 Bank of Canada Core CPI (M/M)(FEB) - 0.30%
12:30 Bank of Canada Core CPI (Y/Y)(FEB) - 1.50%
12:30 CAD Retail Sales Ex Autos (M/M)(JAN) - -0.50%
12:30 CAD Retail Sales (M/M)(JAN) - -0.10%
13:45 USD Markit Services PMI(MAR) 56.2 56
13:45 USD Manufacturing PMI(MAR) 53.5 00:00
14:00 USD Existing Home Sales(FEB) 5.10M 4.94M
14:00 USD Existing Home Sales Change(FEB) 2.20% -1.20%
14:00 USD Wholesale Inventories(JAN 12) - 1.10%
18:00 Monthly Budget Statement(FEB) 25.0B 9.0B

*All rates shown are indicative of interbank rates and should only be used for indication purposes only. It is important to note that foreign exchange rates fluctuate and that rates may vary depending on the amount and the base currency that is purchased or sold. Rates are correct as of 8:00am UK time. CentralFX are not responsible for the rates shown.