“The Bank of England has pledged to take ‘all needed steps to protect stability sending the pound back down.
The final Markit/CIPS UK Manufacturing Purchasing Managers' Index came out at 51.7 points in February, a marginal downgrade and still above the 50-point level which separates expansion from contraction.”
Post-Brexit talks kick off today with low expectations. In press briefings, EU officials have said that negotiations may break down within several weeks as both sides have differences on several topics.
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The GBP/USD pair failed to capitalize on its early uptick on Monday, rather met with some fresh supply after the Bank of England (BoE) showed readiness to take all needed steps to protect stability. This comes on the back of persistent uncertainty about the future UK-EU trade relationship and fears of a no-deal Brexit, which eventually turned out to be one of the key factors that exerted some fresh pressure on the British pound. Meanwhile, a modest downward revision of the final UK Manufacturing PMI, coming in at 51.7 for February as compared to 51.9 estimated earlier, failed to impress bulls or did little to provide any meaningful impetus to the major.
The pair finally settled near the lower end of its daily trading range, around mid-1.2700s, albeit the downside remained cushioned as investors preferred to wait for Brexit updates before positioning for the next leg of a directional move. Hence, the key focus will remain on any headlines coming out of the first formal meeting between the UK chief Brexit negotiator, David Frost, and his EU counterpart, Michel Barnier.
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