GBP/USD has edged higher in Tuesday session. In North American trade, the pair is trading at 1.3221, up 0.17% on the day. On the release front, British mortgages slumped to their lowest level in almost six years. The February reading of 35.3 thousand was well below the forecast of 39.4 thousand. It was also a disappointing day for U.S. releases. Building permits slowed to 1.30 million, shy of the estimate of 1.32 million. CB consumer confidence fell sharply to 124.1, well below the estimate of 132.1 points. On Wednesday, the U.K. publishes CBI Realized Sales.
Another vote in parliament, another defeat for Theresa May. On Monday, lawmakers voted to wrestle control of the Brexit process away from the government. Parliament will now vote on Wednesday on various non-binding alternatives. These could range from a hard Brexit to holding a second referendum. The EU extended the March 29 Brexit deadline last week. If May’s withdrawal deal fails to pass for a third time, the U.K. would leave the EU on April 12 without a deal. If May’s deal is approved, the deadline would be extended until May 22. With plenty of Brexit drama ahead, we could see some swings from the British pound during the week.
The Federal Reserve has become more dovish, leaving investors in a glum mood. At last week’s meeting, policymakers indicated they had no plans to raise interest rates in 2019 and also lowered its growth forecast for 2019 to 2.1%, down from 2.3% in December. There was more bad news on Friday, as the spread between 3-month and 10-year Treasury notes turned negative for the first time since 2007, pointing to an inverted yield curve. All eyes will be on U.S. Final GDP, which will be released on Thursday. If GDP is weaker than expected, the U.S. dollar could lose ground.
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