Now, all eyes turn to the summit in Brussels on Thursday, where EU leaders will have their say on an extension to Brexit. It’s key to note that the extension has to be unanimously agreed upon by all 27 member nations before a no-deal Brexit can be safely removed from the table; should just one of the EU members reject reasons for the deadline extension, the Pound will most likely find itself exposed to significant downside risks. With the prolonged moving nature and fluidity of the Brexit situation weighing heavily on sentiment, Sterling remains at risk of unwinding its year-to-date gains.
Still, the base case that markets are pricing in is one of a delayed Brexit, which may only happen in 2020. However, as we have learned in recent weeks more time may not wholly be a good thing, as it could also bring about extended periods of uncertainty and potentially more permutations to the final Brexit outcome.
Barring any more surprises, expect the Pound to trade range-bound this week.
Commodity spotlight – WTI Oil
WTI Crude found comfort near its highest levels so far this year, after OPEC+ assured markets that its members will stick to the output cuts through the first half of 2019.
Saudi Energy Minister Khalid Al-Falih says there remains a “significant glut” in global supplies which still needs to be drawn down before considering scaling back on production cuts, a move that’s supportive of Oil prices.
OPEC+ producers need to demonstrate unified efforts in their attempts to rebalance the Oil markets and to have any chance of offsetting record US Shale production.