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Postponement and delay

Brexit 2021

Looking at this morning's online media headlines a dispassionate observer could be forgiven for thinking that the tale of Queen Anne and her buddies has superseded the Brexit Pantomime in popular culture. Entertainment-wise, that is entirely possible. But for sheer dramatic suspense nothing can match Brexit. No-deal or 2021?

Over the weekend the Brexit theme was one of delay. This week's meaningful vote in parliament has been delayed to 12 March. Britain's smooth departure from the EU just 17 days later looks implausible so the question is how long the delay will be - a couple of months or a couple of years. The EU is said to be keen to avoid moving B-Day a month or so down the road only to have to repeat the process when parliament again fails to reach agreement, hence the suggestion of 2021.

Investors would be happy with either. They will take anything that postpones the day of reckoning and gives the British economy time to prepare for whatever lies ahead. In the meantime they will be waiting anxiously to see what becomes of the say-no-to-no-deal legislation that is likely to be put before parliament on Wednesday. Sterling was flat on Friday and is an average of 1.1% higher on the week.

More popular delay

Another delay popular with investors is the US president's postponement of his deadline for a trade deal with China. Because he has not set a new deadline, investors believe he is keener to end the trade war than to escalate it.

There was more emollient talk on China's trade with Australia and New Zealand. Beijing denied that it had banned imports of Australian coal, or that it was upset at the treatment of Huawei products.

As the safe-havens lost ground the commodity-related currencies moved ahead. The top performer over the weekend was the NZ dollar, which is up by 1%. Some of that came from steady work on Friday; the rest was the result of this morning's report of a stronger-than-expected 1.7% Q4 increase in retail sales.

Central bankers

At the end of last week central bankers were out in force. Some of their comments were neutral, some were negative for their own currency and none was positive. The Bank of England governor and the Federal Reserve vice chairman are up today.

On Thursday the Bank of Canada's Stephen Poloz stunned investors by revealing that the future course of interest rates is "highly uncertain". The following day the Philip Lowe from the Reserve Bank of Australia tried to spin falling house prices as a plus because as prices come down, they will allow more people to purchase their own home. The Federal Reserve's Richard Clarida and John Williams spoke on Friday about monetary policy at a technical level, avoiding making any rate predictions.

Mr Clarida will be out again this afternoon. Ahead of him, Mark Carney will be talking to parliament's Treasury Committee about the bank's Inflation Report. The subject of Brexit will inevitably come up.

GBP in average unchanged by Brexit delay talk

GBP in average unchanged by Brexit delay talk

AUD helped by emollient trade news

AUD helped by emollient trade news

NZD leads after retail sales data

NZD leads after retail sales data

USD lags as China trade talks prolonged

USD lags as China trade talks prolonged

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