British pound and Brexit negotiations
The British pound (FXB) depreciated 1.2% against the US dollar (UUP) for the week ending March 2, 2018. The pound (GBB) closed at 1.3805 for the week—compared to 1.3967 the previous week. The pound’s value declined due to the United Kingdom’s government’s failure to negotiate a concrete Brexit deal with the European Union. In a speech last week, British Prime Minister Theresa May offered no solution for the European Union’s customs partnership or the Irish border issue, which left investors waiting for more clarity.
British equity markets (BWX), which were trading on a weak note even before the tariff-related sell-off, closed lower last week. The FTSE 100 Index (EWU) fell 2.70% for the week ending March 2 and closed at 7,069.90.
Speculators’ increased bullish positions
According to the latest Commitment of Traders report released on March 2, 2018, by the Commodity Futures Trading Commission, speculators increased their overall bullish positions by 4,884 contracts in the previous week. The total outstanding net long contracts increased from 7,137 contracts to 12,687 contracts.
British pound this week
This week, the developments surrounding Brexit negotiations could be traders’ key focus. Markets hope that a transition deal will be finalized before the European Union’s summit on March 22–23. Apart from Brexit negotiations, US purchasing managers’ index data and trade balance data are due to be reported this week. The data shouldn’t have a major impact. Forex traders will likely be focused on central bank action and political developments in the European Union.