British Pound is Pressured by Brexit Uncertainty
The US dollar is recovering slightly against major currencies, in particular the euro and the British pound. Personal income in the US increased by 0.4% in December compared with a 0.3% expectation. Personal expenses also increased by 0.4% according to consensus. Headline PCE indicator slowed to 1.7% year-to-year.
The British pound is burdened by political uncertainties in the UK. It is reported, that Prime Minister Theresa May may face another challenge to the leadership after the House of Lords Constitution Committee criticizes the Brexit law of Theresa May, citing fundamental shortcomings. And there is one more difficulty, because in many areas the final form of this law will depend on the results of negotiations between the UK and the EU.
ECB chief economist Peter Praet rejected the idea of stopping the asset purchase program. The politician said that inflation is still far from the ECB's 2% target. At the same time, the Governing Council of the ECB wants to be sure that the expectation of an upward inflation adjustment has a fairly high probability of implementation and is being implemented on a sustainable basis.
This week the Fed will hold a meeting. This meeting will be the last under the leadership of Janet Yellen. It is expected, that the Fed will consider the problem of the recent weakness of the US dollar, and the next rate increase will take place in March.