The BI article gives the impression that the EU wants to negotiate an “association” agreement which could give Britain “privileged” single market access and membership of EU agencies. The resolution marks a break from the position of Michel Barnier, the EU’s chief Brexit negotiator.

Shortly after the release of the BI article, the UK’s Brexit Minister, David Davis spoke in Vienna and set out the next steps on the ‘road to Brexit’. He mentioned that Britain and EU “should both respect fair trade and open competition” and that “British and EU companies should not be able to merge and significantly reduce consumer choice”. He added fuel to hopes for a Brexit breakthrough by suggesting that they are “working toward a Brexit deal later this year and everything points to Brexit deal being well on the cards”. Still, discord remains within the ruling Conservative party with a letter to the Prime Minister signed by 62 Eurosceptic MPs of the European Research Group making various “suggestions” which included being able to start trade negotiations immediately after Brexit (going against the transitional agreement currently proposed by the EU) and for the U to be able to take back control of its laws rather than becoming a “rule taker” from the EU.

Germany’s economic confidence weakened in January, survey results from the Mannheim-based think tank ZEW showed Tuesday. The ZEW Indicator of Economic Sentiment dropped to 17.8 points in February from 20.4 in January. However, the score was above the expected level of 16.0. The current conditions index fell to 92.3 from 95.2 in the previous month. The score was forecast to fall to 93.9.

The week ahead

This evening, investors will turn their attention to the minutes of the US Federal Reserve’s last policy meeting in late January. A hawkish tone to the minutes could prompt market to price in the risk of a faster and more frequent interest rate rising cycle, should this ring true we would expect to see the dollar firm. Before this evening’s main event, an increase in fundamental data will be seen from the EU, UK and US. France, Germany and the EU release preliminary PMI data for the Manufacturing and Services industries. The UK releases labour market data with average earnings and unemployment figures being released at 09:30. This afternoon Mark Carney and a host of MPC members will address the Treasury Select Committee regarding the Bank of England’s latest Inflation Report. Shortly after we head to the States for their ‘flash’ PMI Manufacturing & Services data before the main event at 19:00. 

Thought of the day

The fast food giant KFC was in disarray yesterday after it bizarrely ran out of chicken, giving the company little choice other than to close hundreds of outlets close across the country! Despite claiming issues with their logistics company were at the heart of the problem, chicken lovers were left displeased as they had to seek alternatives to get their fast food fix. Even Quorn, the meat-free brand, got in on the act and tweeted an offer to supply KFC with some of its Quorn Crispy Nuggets in a bid to satisfy customer’s need for chicken. At first glance the offer may not be appealing to fried chicken lovers across the country but once the health benefits are taken into consideration, the meat free substitute could in fact become a viable alternative for some. If the world of FX, there are always plenty of alternatives to consider to the conventional forward which offer a number of benefits over the forward – particularly in uncertain markets. To discuss these in more detail, or even to share your KFC woes, call your Investec dealer today.