• Dovish Fed signals no rate hikes in 2019 and one in 2020
  • GBPUSD under pressure after formal request for extension
  • Markets will watch the EU Summit and the BoE today

US equities traded mixed after the Fed signalled at its meeting yesterday that it would not tighten rates at all in 2019 and only once in 2020, reflecting concerns over slowing growth. It also announced that it would taper securities runoff in May and end balance sheet runoff completely in September, and lowered its growth outlook for 2019 and 2020 (Bloomberg)
Following the meeting, Barclays Research revised their outlook for monetary policy, and expect no further rate hikes in the forecast horizon through the end of 2020
The surprisingly dovish FOMC stance saw the USD drop against most currencies, with EURUSD rallying c.0.9% after the meeting
GBPUSD came under pressure yesterday after PM May formally requested an extension to Article 50 until 30th June 2019, indicating that she was not prepared to extend beyond this date. EC President Tusk responded by saying that such an extension would only be possible if the UK Parliament voted in favour of the Withdrawal Agreement by 29th March (FT)
PM May is expected to bring her deal back for a third Meaningful Vote next Tuesday or Wednesday (FT)
Today is the first day of the European Summit in Brussels. Whilst a range of topics is to be discussed, the main focus will be on Brexit, and markets will watch for any further response to PM May’s extension request (FT)
The Bank of England meets today, and Barclays Research expects a unanimous vote to keep rates on hold. They also look for a rhetoric of ‘gradual and limited’ rate hikes in the event of an orderly Brexit