The pound could be in for an extremely volatile morning with a statement from EU Council President Donald Tusk expected shortly. He is expected to clarify the initial stance and objectives for the European Union in these negotiations. The detail in the wording is paramount for the currency markets today as it will set the tone for the how the negotiations will take place. GBP EUR has picked up well but this could change things materially.
Article 50 has been invoked but the way in which negotiations will take place is a major sticking point. It is well known that the EU seek to tackle the issue of an exit bill completely separately from any future trade deal whilst the British position is clear that the negotiations must be agreed in tandem. The statement this morning may provide some clues as to where this will all be heading and volatility is to be expected.
UK Gross Domestic Product figures are released this morning and represent the final revision for the fourth quarter in 2016. UK GDP has proved extremely resilient in recent months and anything better than expected here could see further support for the pound.
As far as the Euro is concerned the single currency is in my view likely to come under considerable pressure in the coming weeks. The first round of French elections held on 23rd April is a major issue for the Eurozone which is facing a raft of serious issues as things stand. The prospect of a Marine Le Pen cannot be ruled out and any polls which put her in front in the Presidential race could see the Euro weaken materially.
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