The British pound fell against the US dollar on Friday, while the European currency continued to trade in a narrow side channel.
The downward movement on the pound was resumed after it became known that the British Parliament voted against the Brexit agreement proposed by Theresa May - 344 votes against, 286 votes in favor. This means that the chance of a British exit from the EU without a deal has increased significantly. Now the UK will have to formulate an alternative proposal by April 12. Already on April 10 will appoint another EU summit, where European leaders will discuss further actions related to Brexit.
The more uncertainty will hang with Brexit, the more pressure will be exerted on the pound.
Weak data on the US economy, which came out on Friday afternoon, did not allow the US dollar to continue its upward trend against the European currency.
According to the report, US consumers increased their spending quite slighty in January 2019, indicating caution that households save at the beginning of the year.
According to the US Department of Commerce, personal expenses of Americans in January increased by only 0.1% compared with the previous month, while in December there was a decrease in expenses by 0.6%. Revenues rose a little more. The report indicates that personal incomes of American households in February increased by 0.2%, after falling by 0.1% in January of this year. Economists had forecast growth in spending in January by 0.3%, while revenue growth in February by 0.2%.
The weak report on the slowdown in the PMI Purchasing Managers Index Chicago also did not appeal to buyers of the dollar.
According to the data, in March of this year, the index dropped to 58.7 points from 64.7 points in February. I recall that values above 50 indicate an increase in activity.
The report on the growth of sales of new homes in the United States did not support the dollar, although it indicated a slight recovery in the market after a long period of weakness. According to the US Department of Commerce, sales of single-family homes on the primary housing market in February 2019 increased by 4.9% to 667,000 homes per year. Economists had expected sales of 620,000. Compared to the same period in the previous year, sales grew by 0.6%.
The speech of the representative of the Federal Reserve Robert Kaplan on Friday evening was left unattended by traders. Kaplan said he did not expect a rate hike in 2019, but his opinion may change, as the main thing is that the Fed should show patience and flexibility. Currently, Fed policy is moderately soft. The representative of the Fed also noted that if GDP growth is below potential, then inflation may continue to slow down, and this will necessarily affect the timing of further increases in interest rates.
The material has been provided by InstaForex Company - www.instaforex.com