Expectations for a soft Brexit or second referendum seem to be propping the pound higher and higher these days, but will this sentiment last for yet another week?
BOE Governor Carney’s speech (Jan. 28, 2:30 pm GMT)
Before Brexit hogs the spotlight again for the week, all eyes and ears could turn to BOE Guv’nah Carney’s Q&A session at the Bank of England’s Future Forum.
Other BOE policymakers are set to join him in responding to panel questions, although the discussions will mostly focus on the future of money.
Still, any remarks related to the U.K. economy’s performance or monetary policy could spur a strong reaction from sterling. After all, U.K. data has been more or less upbeat these days, so highlighting the resilience of the economy could mean more pound gains.
Just a couple of months left until Brexit! Last week’s episode featured a rejection of PM May’s Plan B in parliament (no surprises there) and a few amendments being pushed.
One, in particular, could pave the way for legislation to extend Article 50 or push back the official divorce date in order to buy more time for negotiations. There is some hope that EU officials could give in to a couple of weeks’ extension as they are also keen on avoiding a “no deal” situation.
The border backstop remains the thorn in the side, but there have been reports that the DUP could support the Brexit deal if it includes a “specifically time-limited backstop.” The House of Commons is scheduled to vote on January 29.
If approved, the European Commission will have its turn to respond to the agreement and refusal to budge on its backstop stance could still revive the odds of a “no deal” Brexit. A defeat could allow parliament to take over the negotiations, which might mean an even bigger mess.
Missed last week’s price action? Read the GBP price review for January 21-25!