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12.03.2019 05:11 PM
Brexit: Pound storm before a key meeting on Brexit issue

After yesterday's news from Theresa May, the British pound seems to have found strength in itself and significantly strengthened against the US dollar, but today, in the first half of the day, despite good data on UK economic growth, it just fell off.

All this once again proves all the nervousness of the situation that now prevails around Brexit, since time is running out, but there is no solution. Theresa May's loud statements about another success in the negotiations, as we have become accustomed to, are only her desire that goes against the wishes of parliament. So it turns out that, by presenting what is desired as real, the British Prime Minister leads only to an increase in panic and a surge in volatility in the financial markets. In any case, the wait is not long, although, after today's vote, nothing can clear up. If parliament wraps up another May proposal, the situation will only get worse.

As noted above, weak December has outgrown quite a good January. A return to sustainable growth, even against the background of current political events, is a good harbinger.

According to the National Bureau of Statistics, from November to January 2019, the UK economy grew by 1.1% year on year. The data from October to December were revised to 0.9% year on year.

Compared with December 2018, the UK economy grew by 0.5% in January. In December, I recall, there was a decrease of 0.4%.

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As noted in the report, the service sector, as well as retail trade, contributed to good growth, which offset the failure of industrial production and construction.

Industrial production in the UK in January increased by 0.6% compared with December but decreased by 0.9% compared with January 2018. Economists had expected production to grow by only 0.2% in January. Manufacturing industry in the UK for the three reporting months decreased by 0.7%.

The UK foreign trade deficit in goods in January amounted to 13.1 billion pounds, while the deficit with non-EU countries in January was at the level of 5.0 billion pounds.

With current volatility, talking about the technical picture of the British pound hardly makes sense.

Reports published on the American economy did not help the dollar much.

According to published data of the National Federation of Independent Business NFIB, in February 2019 the confidence of small businesses increased. Thus, the small business optimism index in February was 101.7 points versus 101.2 points in January. Economists had expected the index to rise to 103 points.

The NFIB said that small companies were happy to complete the partial suspension of government agencies, but more clarity was needed regarding the future.

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