Focus on Fed meeting

The euro is holding onto the gains it made last week against the dollar, which were fuelled by some better than expected Euro area economic data, and is trading at around $1.1350 this morning. Sterling briefly dipped against both the euro and the dollar yesterday, after the Speaker of the UK parliament ruled that he would not allow another vote on the government’s Brexit deal unless it was substantially changed, before recovering to around 85.5p and over $1.32 respectively

Following the Speaker’s ruling on the Brexit deal, Theresa May will presumably request an extension of Article 50 at this week’s summit of EU leaders, which she was set to do in any case although hoping that it would have been in the context of her deal having been put to and passed  in parliament. It’s fair to say the situation is fluid though, and we’ll see how things pan out over the next few days

The Fed holds a two-day meeting today and tomorrow. Having raised interest rates nine times already the Fed is in wait and see mode as it assesses how the US economy is performing, saying it will be “patient” as it determines what future changes to rates may be appropriate. For its part, the market thinks rates have now peaked and is pricing in the chance of a cut next year, so the focus will be on whether the Fed provides any support for this view at this week’s meeting

The Bank of England also announces its latest interest rate decision this week (Thursday) – it is set to sit on it hands again as, like the rest of us, it awaits developments on the Brexit front

Notable data  this week include Euro area flash PMIs for March on Friday and the latest UK labour market report covering the period November to January scheduled for today