WAITING ON THE BOE

The dollar's latest spurt softened safe havens such as the yen, with the dollar adding 0.31 percent to 110.71 yen JPY=. 

It also firmed 0.45 percent against a basket of currencies to 95.484 .DXY, hitting an 11-month top and sending the euro EUR= down to a three-week low of $1.1500.

Sterling GBP=D4 was at seven-month low of $1.3108, having made only a fleeting recovery after Britain's Prime Minister Theresa May won another crucial Brexit vote in parliament.

The Bank of England holds a policy meeting later in the session, but not a single analyst polled by Reuters expects a rate hike and some are getting cold feet about a rise in August given recent soft economic data.

While the European Central Bank has signaled an end to bond-buying, it also pledged to keep rates low past next summer, and the Bank of Japan shows no sign of unwinding its stimulus.

Switzerland’s central bank kept its rates deep in negative territory on Thursday and warned that risks to the economy were rising amid all the trade war noise.

Ahead of Friday’s meeting of oil producers in Vienna, Saudi Arabia is trying to convince fellow OPEC members of the need to pump more oil, according to sources familiar with the talks. Iran on Thursday signaled it could be won over to a small rise in output, potentially paving the way for a deal. 

Benchmark Brent crude LCOc1 fell $1.56 a barrel to a low of $73.18 before recovering slightly to $73.34, down $1.40, by 0850 GMT. U.S. light crude CLc1 was $1.00 lower at $64.71.

Daily Briefing: Brexit - getting meaningful?

British Prime Minister Theresa May faces her biggest parliamentary test over Brexit yet from today as lawmakers start to vote on a bundle of legal amendments that could determine Britain's future ties with the EU. 

The most challenging is a requirement that parliament is granted a “meaningful vote” on the outcome of her negotiations with Brussels that would both allow it to throw out any deal and give it powers to set the government’s future direction afterwards.

The vote on that is due to come this evening after six hours or so of debate starting at lunchtime. Other votes today cover the vexed Irish border issue and whether the Brexit departure date should be legally set in stone as March 29 next year.

Aid workers on board the ship Aquarius have requested medical assistance for some of the 600-plus migrants on board before it embarks on the three-day voyage to the Spanish port of Valencia.

Yesterday's events were a tale of two governments as Italy's new anti-immigrant Interior Minister Matteo Salvini hailed as a victory the decision by Spain's new Socialist government to accept the migrants. 

Sterling slumps to its lowest since December as dollar strengthens

European Stock Markets

Sterling slumped to its lowest since December on Monday as the dollar surged and investors prepared for data this week that could determine whether the Bank of England raises interest rates in 2018. 

A broad rally by the dollar and dwindling expectations that interest rates will rise have caused what had been one of the best-performing major currencies to give up all its 2018 gains.

Sterling slumped half a percent on Monday and fell below $1.34 for the first time since December , before trimming some of its losses.

The currency was headed for its biggest daily loss in three weeks as the dollar rose broadly on reports that the United States was putting its trade war with China “on hold”.

The pound also fell versus the euro, sliding 0.2 percent to 87.64 pence.

Important data on the British economy is due out this week including inflation on Wednesday and gross domestic product on Friday.

The figures will be scrutinised by investors to gauge whether the BoE might tighten monetary policy as early as August.

Risks around the sort of post-divorce relationship Britain can agree with the EU weighed heavily on the pound last week. But the biggest reason for sterling’s fall has been a drastic shift in market expectations of when the BoE will raise rates.

Recent weak economic data mean markets are now not even pricing in a full 25-basis-point hike by the end of 2018. They had expected two 25 bp rises this year.

Concerns over Brexit also continue to dog the pound.

Scottish First Minister Nicola Sturgeon said on Sunday she would consider another vote on independence for Scotland when the British government offers some certainty over Brexit.

Adding to the political uncertainty, lawmakers from Prime Minister Theresa May’s governing Conservative Party reportedly are bracing themselves for a snap autumn parliamentary election amid fears that the Brexit deadlock will become insurmountable.

Analysts at CMC Markets and Commerzbank, in notes to clients, predicted the pound would fall towards the $1.3300 level in the short term.

U.K. stocks fall from record as AstraZeneca, oil stocks decline

European Stock Markets

U.K. stocks on Friday pulled back from a record close, as shares of AstraZeneca declined following the heavyweight drug maker’s earnings report, and as shares in oil companies took a break from their recent rally.

What are markets doing?
The FTSE 100 index UKX, -0.24%  dropped 0.2% to 7,775.70, on track to break a three-day winning streak. On Thursday, that win streak helped push the London benchmark to an all-time closing high, after a solid run that was boosted by a weaker pound and a rally in oil stocks.

For the week, the FTSE 100 was on track for a 0.6% gain, which would mark an eighth straight week of advances. That would be its longest weekly winning run since July 2005, when the index also rose for eight consecutive weeks.

The pound GBPUSD, -0.1332%  on Friday fell to $1.3512 from $1.3516 late Thursday in New York.
What is driving the market?

U.K. investors paused for breath after pushing the blue-chip index to a record on Thursday. They also monitored geopolitical risks and the latest developments in the Brexit discussions.

On the Brexit front, U.K. Prime Minister Theresa May denied reports earlier this week that Britain was looking to stay in the EU customs union after Brexit. Instead, her cabinet agreed to a “backstop” proposal that would align the U.K. with EU tariffs after 2020 to avoid a hard border with Ireland. The backstop plan would only be needed if the U.K. was unable to agree on a separate customs deal with the EU, which would raise prospect of a hard border in Ireland, according to the BBC.

On the global scene, U.S. President Donald Trump somewhat dashed hopes of a trade deal between the U.S. and China. At a press conference on Thursday, Trump said he doubts that the negotiations will succeed because “China has become very spoiled” on trade.

With no major economic reports on deck in the U.K. on Friday, traders instead focused on the latest corporate news.
Stock movers

Shares of AstraZeneca PLC AZN, -2.62% AZN, -0.16%  dropped 1.8% after the pharma giant reported core earnings that missed forecasts. Core operating profit — the company’s preferred measure, which strips out one-time gains and impairments — fell to $896 million from $1.67 billion a year ago.

J Sainsbury PLC SBRY, -0.03%  rose 0.2%. The gain came even as the U.K. competition watchdog said it is considering investigating the proposed merger between J Sainsbury PLC and Walmart Inc.’s WMT, -1.90%  British arm, Asda Group Ltd.

Energy companies were also falling after scoring multi-year highs on Thursday on the back of a continued advance in oil prices. Shares of BP PLC BP., -0.33% BP, +1.03%  , which closed at an eight-year high on Thursday, dropped 0.3% on Friday, while Royal Dutch Shell PLC RDSB, -0.48% RDS.B, +1.61%  , which scored an all-time high on Thursday, fell 0.5%

EU Hardens Against Trump With United Stand on Trade and Iran

Global Stock Markets

European Union leaders presented a determined front to stand up to U.S. President Donald Trump’s threats to penalize EU businesses and scupper the Iran nuclear deal.

 As the bloc paved the way for retaliation, its 28 leaders meeting in the Bulgarian capital Sofia made a rare demonstration of unity in the face of what EU President Donald Tusk called the “capricious assertiveness” of the Trump administration.

Tusk told leaders over a late dinner on Wednesday that the EU will continue fighting for the rules-based international system, despite recent U.S. decisions on climate change, tariffs and on Iran, according to an EU official present. On trade, all agreed to back the European Commission’s insistence that it won’t negotiate unless the U.S. grants a permanent exemption from tariffs on steel and aluminum, the official said.

Macron spoke as the Commission, which negotiates trade matters on behalf of the bloc, published a law preparing retaliation. It foresees the possibility of hitting 2.8 billion euros ($3.3 billion) of U.S. goods imported into the EU with a reciprocal 25 percent levy as of June 20.

Europe’s mood is shifting from shock at Trump’s “America First” agenda to a resolve to close ranks and assert its own position. Trans-Atlantic tensions came to a head with the U.S. president’s decision announced last week to pull out of the landmark Iran nuclear accord which the remaining signatories -- Russia, China, France, Germany and the U.K., along with the EU -- all say is working.
Energy Ties

Leaders including Macron and German Chancellor Angela Merkel agreed that the commission, the EU’s executive, is prepared to discuss trade concerns with the U.S. including deepening energy ties and reform of the World Trade Organization once a permanent waiver is in place, the official said. The bloc would also discuss WTO-compatible ways to improve reciprocal market access for industrial products including cars to avoid a trade war.

Merkel, Macron and British Prime Minister Theresa May briefed fellow leaders on Iran, after failing to persuade Trump to stick with the accord. The EU agreed to begin work to protect European companies negatively affected by the U.S. decision to withdraw and reimpose sanctions, while also addressing concerns about Iran’s ballistic missile program and its wider role in the Middle East.

The EU’s proposals are its most assertive yet in dealing with the U.S., whose withdrawal from the 2015 agreement threatens to scupper the treaty and has worried leaders it could put Iran back on a path to developing nuclear weapons.

EU discussions on how to keep the deal -- and economic relations with Iran -- alive, have focused on: keeping Iran’s oil and gas industry viable; the creation of special purpose vehicles to allow for transactions between the regions; developing more contracts between European companies and their Iranian counterparts; and how to protect European firms that continue to work with Iran.
Blocking Statute

The EU has discussed instituting a so-called blocking statute, which would shield European companies doing business with Iran. The last time the bloc threatened to use this measure was in 1996, when Bill Clinton’s administration stood down and agreed to waive sanctions aimed at curbing foreign investment in Cuba, Iran and Libya.

The proposed EU actions are no guarantee that the accord can be salvaged, however, with the U.S. Treasury Department saying companies with existing contracts will have 90 to 180 days to extract themselves from their Iran dealings before becoming subject to penalties.

Sterling rallies vs dollar, euro on EU customs union report

European Stock Markets

Sterling briefly rallied more than half a percent versus the dollar on Thursday after a media report that Britain would tell Brussels it was prepared to stay in the European Union’s customs union beyond a transitional arrangement. 

British cabinet ministers are deadlocked over a future deal with the block and the Telegraph newspaper said Britain would tell Brussels it was prepared to stay in the customs union beyond 2021, sending the pound to a two-day high.

Sterling later relinquished most of its gains however. Prime Minister Theresa May denied she was “climbing down” from her position and said Britain would be leaving the EU customs union as she has previously outlined.

At GMT 0820 sterling was up 0.2 percent at $1.3525 and traded up 0.1 percent versus the euro at 87.37 pence, close to a three-week high of 87.15 hit earlier in the session.

The pound’s jump suggests the currency remains vulnerable to Brexit negotiations that have dominated British politics since a 2016 referendum, even as Britain’s economy has shown signs of strengthening.

Riechelt said that the risk of a hard brexit remained, though, and that the pound could face downward pressure because the EU would likely meet the proposal with scepticism.

Britain is due to leave the EU in March next year although it has secured a transitional arrangement to keep its trade ties with the bloc unchanged until the end of 2020, as long as a permanent deal can also be reached in the coming months.

Cabinet ministers have discussed keeping the UK tied to EU customs rules for longer as a way of avoiding a hard Irish border.

Other analysts downplayed the importance of the customs union discussions for the pound.

Sterling close to seven-week low as traders await Brexit speech

European Stock Markets

Sterling steadied close to a seven-week low against the dollar on Friday, as traders eyed a speech from Prime Minister Theresa May on her plans for a trade deal with the European Union. 

 May will in the early afternoon set out her vision for a Brexit deal deeper and wider than any“free trade agreement anywhere in the world”, telling the European Union that is in their“shared interest”. 

The prime minister, weak after losing her parliamentary majority last year, will struggle to satisfy the demands of EU officials and the warring factions in her Conservative party and companies desperate for clarity. 

Worries that Britain might not secure the post-Brexit transition period that it wants by the end of March have knocked sterling this week, with the EU’s chief negotiator Michel Barnier saying a deal on that was not guaranteed. 

The pound has struggled to build on a rally earlier this year amid a resurgence in political risk centred on Brexit and a broad rebound in the dollar. It suffered its worst month since October 2016 in February, as the greenback strengthened across the board. 

On Friday it was flat at $1.3777, close to a seven-week low of $1.3712 touched on Thursday.

Against the euro, it hit a two-week low of 89.16 pence. 

A purchasing managers’ index (PMI) from the construction sector was due at 0930 GMT but was not seen as likely to impact sterling much because of the focus on May’s speech. The PMI for the services sector is due on Monday.

Sterling at three-week lows, after Brexit warning from Barnier

European Stock Markets

Sterling skidded below $1.38 to its lowest in almost three weeks on Wednesday, after the EU’s chief Brexit negotiator said a transition deal was not guaranteed and the prime minister said the EU’s draft legal text would undermine Britain.

The British currency extended losses to trade down as much as 1 percent at $1.3775 versus the dollar, its weakest since Feb. 9. 

Sterling rallied at the start of this year, partly because investors were confident Britain can buy itself more time to agree terms of its departure from the European Union with a transition deal, that politicians want agreed in March at an EU leaders’ summit. 

But comments by EU chief negotiator Michel Barnier on Wednesday renewed concerns about whether that was feasible. Any delay could encourage doubt about an interest rate hike by the Bank of England in May, which investors now expect. 

The Bank said this month that rates would need to rise a bit more than expected and sooner, as the economy showed resilience and inflationary pressure grew. But its monetary assessment is dependent on the smooth progress in talks with the EU. 

Barnier said talks on a post-Brexit transition period had confirmed “significant divergences” and said Britain must “pick up the pace” of talks if it wants a deal this year. 

Against the euro, sterling slipped to a six-day low of 87.80 pence. But that was still within the broad 87-89 pence per euro band that has held in recent weeks. 

Barnier urged London to “pick up the pace” of talks if it wanted a deal this year on a draft treaty.

A draft legal text published by the European Commission drew criticism from a unionist party in Northern Ireland and British Prime Minister Theresa May said it would undermine the UK’s common market and threaten its constitutional integrity. 

As more negative Brexit-related headlines have emerged, investors have whittled down long positions in sterling. 

The latest positioning data from the Commodity Futures Trading Commission on Friday showed that long sterling positions fell to $8.2 billion (£5.9 billion) compared to nearly $33 billion in late January.

Sterling slides for the second consecutive day

European Stock Markets

Sterling edged lower for a second consecutive day on Wednesday as investors moved to the sidelines before the publication of a first EU draft of a withdrawal treaty, while a dollar rebound also weighed on sentiment. 

EU negotiator Michel Barnier accused the British government on Tuesday of clinging to “illusion” while time runs out for a Brexit deal to avoid massive disruption when Britain leaves the European Union next year. The draft is due around 1100 GMT. 

While sterling has gained nearly 3 percent this year against the dollar thanks to the greenback’s struggles in the opening weeks of 2018, it has only gained 1 percent against the euro in that period and has remained well within a 87-89 pence per euro range. 

On Wednesday, sterling was trading 0.2 percent lower at $1.3893 while it was broadly flat at 87.88 pence against the euro. 

It remains considerably below a post-Brexit referendum high of $1.4346 hit late last month. 

As more Brexit-related headlines have emerged in recent weeks, investors have whittled down long positions in sterling despite some optimistic comments from central bank policymakers in recent weeks. 

British officials accuse Brussels of eschewing creative solutions to avoid trade disruption, while EU leaders complain that Prime Minister Theresa May’s divided government is failing to make its intentions clear. 

Barnier spoke of “significant points of disagreement” on the transition, and suggested Britain was trying to keep it open-ended. EU governments are keen that it does not become a long-term arrangement, though most are willing to consider extending it into 2021 if a future trade deal takes longer to take effect. 

Latest positioning data by Commodity Futures Trading Commission on Friday showed that long sterling positions were down substantially, at $8.2 billion compared to nearly $33 billion in late January.

Sterling climbs higher but investors remain wary

European Stock Markets

Sterling edged higher on Tuesday on the back of a struggling dollar though investors remained wary of chasing the British currency higher before a testimony from new Federal Reserve chief Jerome Powell later in the session.

With expectations of a May rate hike mostly priced into financial markets, the dollar’s fortunes has been the dominant driver in recent sterling price action with investors also wary of Brexit-related headlines. 

Powell’s Congressional testimony will be his first public appearance since being sworn in as chairman earlier this month.

Traders will watch closely to see whether the new chief will continue on the gradual monetary rate path pursued by his predecessor Janet Yellen, or whether he will take a more hawkish approach.

Sterling was trading 0.1 percent higher at $1.3978 in early London trading on Tuesday and about 2.5 percent away from a pre-Brexit referendum high of $1.4346 hit late last month.

Against the euro, sterling was broadly flat around 88.24 pence.

Latest positioning data by Commodity Futures Trading Commission on Friday showed that long sterling positions are down substantially to $8.2 billion compared to more than a 3-1/2 year high of nearly $33 billion in late January.

Recent Brexit-related headlines have also added to the general uncertainty around sterling.

Brief respite followed a speech by opposition leader Jeremy Corbyn on Monday in which he said his Labour Party wanted Britain to negotiate a new customs union with the EU to ensure tariff-free trade after Brexit.

But Prime Minister Theresa May has ruled out any customs union with the EU after Brexit because it would prevent Britain from striking new trade deals with fast-growing economies including as China and India.

Sterling nurses losses near one-week lows on Brexit concerns

European Stock Markets

Sterling held near a one-week low on Monday as a weekend bout of negative news around Brexit negotiations weighed on the British currency although a central bank meeting later this week kept investors wary of adding bearish positions. 

Britain has ruled out any form of customs union with the European Union after Brexit, according to a source in Prime Minister Theresa May’s Downing Street office.

Amid those brewing tensions in the background, British and European Union negotiators this week hold their first formal Brexit talks since the interim deal in December unlocked discussions on their future relationship.

Sterling was flat on the day at $1.4126, just above an intraday low of $1.4083, its lowest since Jan. 30.

Analysts say the currency is also being supported by a repricing of Bank of England interest rate hike expectations - several banks are now calling for a rise to come in May, and for another to come later in the year.

BoE Governor Mark Carney sounded a more upbeat tone than previously at a testimony last week, saying wage growth was finally picking up and that the focus of the BoE is shifting back to tackling above-target inflation.

The central bank releases its inflation report on Thursday and announces a decision by its monetary policy meeting where it is expected to keep interest rates on hold.

Though oil prices, a key component of the import basket and a big driver for inflation, have rallied by more than 10 percent since the Bank of England raised interest rates in November, the impact has been mitigated by sterling’s 6 percent rise in that period.

Latest positioning data showed net long sterling positions remained at their highest levels since July 2014.

Britain’s economy slowed sharply in January, according to a survey and ratings agency S&P Global said that disorderly Brexit would bring renewed downward pressure to the country’s sovereign rating.

May gets 9 billion pounds in China deals

European Stock Markets

British Prime Minister Theresa May left China on Friday with deals worth more than 9.3 billion pounds, at the end of a three-day trade mission where President Xi Jinping pledged to upgrade their “golden era” in relations. 

Britain is trying to reinvent itself as a global trading nation after a 2016 referendum decision to leave the European Union, and China, the world’s second-largest economy, is high on the list of countries that Britain wants to sign a free trade agreement with.

Speaking at a business summit in China’s commercial capital Shanghai, May said Britain was keen to help bring Xi’s vision for globalisation and a more open Chinese economy to life.

Chinese investment is helping Britain develop infrastructure and create jobs, with some 50,000 British businesses importing goods from China and more than 10,000 sell their goods to China, she added.

Britain’s financial services firms alone secured deals worth more than 1 billion pounds and market access, that would lead to 890 jobs, it said, without giving details.

China sees Britain as an important ally in its call for more open global markets, despite widespread concerns in the foreign business community about the difficulty of operating in China, and both countries refer to a “golden era” in relations.

Meeting in Beijing late on Thursday, Xi told May the two countries should “add new meaning into the bilateral ties so as to forge an enhanced version of the ‘Golden Era’,” according to state-run media.

China has also been appreciative of Britain’s enthusiasm for the China-backed Asian Infrastructure Investment Bank and Xi’s Belt and Road initiative to build a new Silk Road.

In a front page commentary on Friday, the overseas edition of the People’s Daily said Britain had shown “intelligence and pragmatism” in supporting Belt and Road.


But Brexit has unnerved Beijing, concerned about losing an important voice supporting free trade in the European Union and what it may mean for market access to Europe for Chinese firms which have invested in Britain.

Still, Chinese Premier Li Keqiang told May on Wednesday that China’s relations with Britain will remain unchanged through Brexit.

Sterling amid renewed Brexit uncertainty

European Stock Markets

Sterling headed on Monday for its biggest one-day fall against the dollar since Nov. 2 as new concerns over Prime Minister Theresa May’s ability to advance her plans for Brexit encouraged traders to take profits after a recent surge. 

The pound is up about 4 percent so far this year, as investors expect Britain and the European Union to agree a transition deal soon for the UK’s exit from the bloc.

But analysts said investors seized on negative headlines on Monday to cut their long positions on the British currency.

The House of Lords Constitution Committee said on Monday that May’s legislation to end Britain’s EU membership had “fundamental flaws”. That followed reports at the end of last week that May was facing another leadership challenge.

Britain is due to exit the EU on March 29, 2019, but there are deep divisions inside the government
and within May’s Conservative party about what sort of relationship should replace 46 years of membership.

Until now, however, those divisions have not appeared to rattle investors, with the currency surging against both the dollar and on a trade-weighted basis since the end of last year.

Data on Friday showed speculators added to their bets on the pound strengthening further in the most recent week, with net-long positions at their highest since mid-2014.

On Monday, however, sterling skidded 0.8 percent to as weak as $1.4030, hitting five-day lows after Theresa May’s spokesman said there was some distance between the EU and Britain on more than one transitional deal issue.

The pound still remains on track for its strongest month against the dollar since July 2010.
Against the euro, sterling was 0.2 percent weaker at 87.95 pence.

One-month sterling risk reversals, which indicate how investors are positioned towards the currency during that period, slipped to their lowest in 12 days, having touched their highest since 2012 last week.

Many investors remain upbeat about the pound. Data last week showed Britain’s economy unexpectedly picked up speed in the last three months of 2017, reinforcing the view that the hit from the Brexit vote in June 2016 was not as bad as some had anticipated.

Carillion collapse regrettable, but government cannot bail it out: PM May's spokesman

The British government cannot be expected to bail out construction and services firm Carillion (CLLN.L), Prime Minister Theresa May’s spokesman said on Monday, after the firm’s collapse. 

“It’s regrettable that Carillion has not been able to find suitable financing options with its lenders, but tax payers cannot be expected to bailout a private sector company. Since the profit warnings were first issued in July the government has been closely monitoring the situation ... we remained hopeful that a solution could be found while putting robust contingency plans in place, ” he told reporters.

“Our primary responsibility as always (was) being able to keep our essential public services running safely.”

Euro jumps to 3-year high on German coalition breakthrough

European Stock Markets

The euro climbed to a three-year high on Friday after German Chancellor Angela Merkel's conservatives and rival Social Democrats reached a breakthrough in coalition talks.

The news gave fresh legs to the current rally being driven by expectations that the European Central Bank (ECB) may quicken the pace of trimming its massive monetary stimulus.

In early London trading on Friday, the euro rallied 0.7 per cent against the US dollar to hit its highest levels since January 2015 at US$1.2120.

On a two-day cumulative basis, the single currency has jumped 1.4 per cent, its best performance since August last year.

On Thursday, minutes of the ECB's December meeting showed policymakers could revisit their communication stance in early 2018, boosting expectations that they are preparing to reduce their vast monetary stimulus programme.

Tony Blair tells UK voters - time is running out to stop Brexit folly

Former British prime minister Tony Blair told voters on Thursday that time was running out to reverse Brexit, a folly that he said would torpedo Britain’s remaining clout and be regretted for generations to come. 

More than a year and a half since the 2016 Brexit vote, the United Kingdom remains deeply divided over the planned EU exit that Prime Minister Theresa May says will take place on March 29, 2019.

Both opponents and supporters of Brexit agree that the divorce is Britain’s most significant geopolitical move since World War Two, though they cast vastly different futures for the $2.5 trillion (1.9 trillion pounds) UK economy and the world’s biggest trading bloc.

Blair, Labour prime minister from 1997 to 2007, said Britain would be poorer and weaker, and he warned that May had solved none of the problems over Northern Ireland’s post-Brexit status.

Blair has repeatedly called for reversing Brexit, echoing other critics such as French President Emmanuel Macron and billionaire investor George Soros, who have suggested that Britain could still change its mind. 

Sterling steadies after British cabinet weakened by latest exit

European Stock Markets

Sterling traded flat on Thursday in a quiet market after falling initially following a survey that showed consumer sentiment had fallen to a four-year low and news that Britain’s deputy prime minister had been forced to resign. 

The pound had edged lower following the resignation but data showing British public finances had
strengthened in November helped the pound recover.

British Prime Minister Theresa May forced Damian Green to resign after an internal investigation found he had made misleading comments about pornography on computers in his office.

The resignation of one of May’s most trusted allies is a blow as she navigates the final year of tortuous negotiations towards Britain’s exit from the European Union in March 2019.

The next phase of the talks has weighed on the pound in recent days, and kept in check gains made after Britain and the EU agreed to move to the second phase of talks.

Traders said volumes were low ahead of the holiday season and in the absence of major economic news or Brexit developments, the pound was stuck in a trading range.

The pound was flat against the dollar at 1.338 after earlier slipping 0.1 percent. Against the euro the pound recovered and was flat at 0.88.

The GfK consumer confidence index showed British consumer sentiment at its lowest level since December 2013 as inflation-squeezed households took a gloomier view of their finances.

Britain’s economy has slowed this year, and IMF managing director Christine Lagarde said on Wednesday the economy was only likely to grow by 1.5 percent next year.

May warns parliamentary rebels not to endanger orderly Brexit

Prime Minister Theresa May warned rebellious lawmakers in her own party they could endanger Britain’s smooth exit from the European Union if they tried to change her Brexit blueprint later on Wednesday. 

May has tried to avert a rebellion in parliament by promising parliament a series of votes on any deal to leave the EU “as soon as possible” after Brexit talks end, but offered little new ahead of Wednesday’s session.

Members of Parliament (MPs) are debating new laws which will repeal the 1972 legislation binding Britain to the EU and copy existing EU law into domestic law to ensure legal continuity after ‘Exit Day’ on March 29, 2019.

After six days of debate in parliament ranging from the legal minutiae of Brexit to the gaping differences between ‘Remainers’ and ‘Leavers’, May could face a defeat as lawmakers demand more say over the final exit deal.

Wednesday’s likely flashpoint is an amendment put forward by a member of May’s own party, the government’s former attorney general, Domiic Grieve, who wants parliament to have a meaningful vote on any deal before it is finalised.

But May warned that his proposal could push the complex task of transposing EU law legislation right to the end of the two-year negotiation period triggered earlier this year.

British PM May preparing to raise Brexit divorce bill offer

European Stock Markets

British Prime Minister Theresa May is preparing to offer up to 20 billion pounds ($26 billion) more to the European Union as part of a Brexit divorce bill, the Sun newspaper reported on Thursday

 

Unless there is movement in the negotiations to unravel more than 40 years of union, Britain may miss a December deadline to move the talks to a discussion of future trade ties, which businesses say is vital for them to make investment decisions.

EU negotiator Michel Barnier has called on Britain to spell out how far it would “honor its obligations” to break the deadlock.

Brexit minister David Davis said on Sunday that Britain will not offer a figure or a formula for how much it believes it owes the European Union.

May says will 'honour commitments' to EU

Prime Minister Theresa May said on Friday she had told fellow EU leaders that Britain would honour its commitments to the Union on Brexit and that other countries would not lose out in the current budget plan.

Asked whether she had told leaders over dinner on Thursday that she was ready to increase Britain’s financial offer, May told reporters that she had repeated points made in a speech at Florence last month. EU leaders said May had made no new pledges and repeated her view that many of the EU’s demands had “no legal framework”.

German Chancellor Angela Merkel, in a markedly positive response on Friday to an EU summit appeal by Prime Minister Theresa May for help with Brexit, said talks with Britain were moving forward and were unlikely to break down.

Merkel made her comments at the end of the first day of a European Union summit and after May had appealed to her fellow leaders to help her silence critics at home and break a deadlock in the talks. After May left the meeting on Friday, the other 27 confirmed a goodwill gesture to speed up future talks by launching internal preparations for after Brexit.

“In contrast to how it is portrayed in the British press, my impression is that these talks are moving forward step by step,” Merkel told a late-night news conference, dismissing as “absurd” suggestions in Britain that the talks should be broken off.

“I have absolutely no doubts that if we are all focussed ... that we can get a good result. From my side there are no indications at all that we won’t succeed,” she said.

Arriving for the second day, others emphasised the positive too: Maltese Prime Minister Joseph Muscat called May’s speech her “best performance yet” and “a warm, candid and sincere appeal”. Ireland’s Leo Varadkar said it was “very strong”.

But others complained they had heard little new of substance and rejected May’s repetition of London’s view that demands for money from Brussels have “no legal framework”. Austrian Chancellor Christian Kern said “rhetorical progress” needed to be followed by “tangible conclusions”.