The date to officially start the Brexit procedure was finally confirmed yesterday.
UK Prime Minister, Theresa May, will trigger Article 50 of the Lisbon treaty on Wednesday March 29, starting the 2-year Brexit negotiation process with the EU. The timetable is in line with her plan to begin “divorce proceedings” by the end of March.
Theresa May will formally notify the EU Council President, Donald Tusk, with a letter next Wednesday. Tusk is expected to present draft Brexit guidelines to the European Union’s 27 member states, within 48 hours of the UK triggering Article 50. The member states are expected to hold a Brexit summit within 4-6 weeks.
Following the news, GBP dropped against USD and EUR. On Monday, GBPUSD fell approximately 100 points from a 3-week high of 1.2435, breaking a support level at 1.2400, hitting the intra-day low of 1.2334. This morning the price has rebounded after testing the support line at 1.2340.
Today, at 9:30 GMT, we will see the release of a series of UK inflation data for February. It will likely affect the strength of GBP and GBP crosses.
There are 9 Fed presidents and FOMC members scheduled to have a speech this week per the following schedule:
Tuesday March 21
10:00 – 11:00 GMT
New York Fed President, a FOMC permanent voting member, William Dudley
16:00 GMT Kansas Fed President, Esther George
22:00 GMT Cleveland Fed President, a FOMC member, Mester
Thursday March 23
12:00 GMT The Fed Chair Yellen
18:00 GMT Minneapolis Fed President, a FOMC voting member, Neel Kashkari
23:00 GMT Dallas Fed President, a FOMC voting member, Robert Kaplan
Friday March 24
12:00 GMT Chicago Fed President, a FOMC voting member, Charles Evans
13:05 GMT St Louis Fed President, a FOMC member, James Bullard
14:00 GMT New York Fed President, a FOMC permanent voting member, William Dudley
Chicago Fed President Evans stated on Monday that “the economy is on a good course”, with the Fed on track to raise interest rates twice more this year. If inflation picks up, four consecutive rate hikes could be possible. President Trump’s administration and fiscal policy would add to further rate hikes.
This week is relatively light on economic data releases. Therefore, the Fed presidents’ prospective hawkish / dovish comments are likely to become the major driver of USD moves.
This morning, the USD index is trading below the significant level at 100.00. The Fed hawks, George and Mester, will likely make more hawkish comments today. Regardless, downward pressure on USD is still heavy.