21/02/2017 - Article 50 to be Triggered Next Week - 21/03/2017

GBP

News broke yesterday morning  that Prime Minister Theresa May is to officially notify the European Union next Wednesday that the UK is leaving.

Downing Street said she would write a letter to the European Council, adding that it hoped negotiations on the terms of exit and future relations could then begin as quickly as possible. As a result sterling fell from a three-week high against the dollar on Monday after the news broke and was sold off during Mondays trading session.

The pound has also come under recent selling pressure as a result of calls for yet another Scottish independence referendum, as investors consider the increased uncertainty posed by a potential breakup of the United Kingdom.

USD

The Federal Reserve is on track to raise interest rates twice more this year, after a policy tightening last week. It could be more or less aggressive depending on inflation and fiscal policies from the Trump administration, a Fed rate-setter said on Monday.

The public comments from Chicago Fed President Charles Evans were among the first since the U.S. central bank lifted its policy rate a notch last week, as expected. It also forecast roughly two more moves in 2017, taking into account low unemployment and inflation pressures.

Overnight Donald Trump spoke at a rally in Louisville, Kentucky. He avoided responding to FBI Director James Comey, who had spent the day testifying about Russia's meddling in the 2016 election and confirmed publicly that there will be an investigation into the connections between Trump associates and Russian operatives. Trump instead focused on his health care overhaul, promising that the new health care legislation would undo what he called the “disaster” of President Barack Obama’s Affordable Care Act.

Key Announcements

09:30 – GBP : CPI y/y, expected at 2.1% against a previous of 1.8%

10:35 – GBP : BoE Gov Carney Speaks