Brexit strategy was defeated in the House of Commons which increased doubts whether the EU would be willing to make concessions on the deal.

A big miss on US retail sales with the sharpest monthly decline since 2009 triggered notable moves across asset classes on Thursday.

The weak data and dovish rhetoric from Fed Governor Brainard triggered a measured dollar reversal, especially for USD/JPY.

European currencies were unable to take significant advantage of US doubts as economic and political reservations continued.

Caution over global growth and uncertainty over US-China trade talks pushed equity markets lower.

Oil recovered strongly from intra-day losses with Brent posting 2019 highs before a fresh correction in choppy trading.

Gold also recovered ground on US dollar weakness.

Bank of England MPC member Vlieghe stated that he considers the appropriate pace of monetary tightening to be somewhat slower. Assuming a deal is reached, the degree of tightening would depend on how much Sterling appreciated. If there was a ‘no-deal’ an easing or an extended pause in interest rate hikes would be more appropriate than a policy tightening.

Sterling tended to drift lower in Europe as gilt yields continued to decline with 20-year yields at the lowest level since August 2017. Losses accelerated in New York amid on-going political tensions and speculation of government defeats in parliament.

The main government motion to express confidence in its Brexit strategy was defeated in the House of Commons which increased doubts whether the EU would be willing to make concessions on the deal. Sterling dipped again after the vote with GBP/EUR settling around 1.1350 as GBP/USD held just below 1.2800. There was a slight recovery on Friday ahead of the UK retail sales data with overall confusion and uncertainty over the UK Brexit policy again curbing Sterling support.

Economic Calendar

09:30GBP Retail Sales (Y/Y)(JAN)3.40%3.00%
09:30GBP Retail Sales (M/M)(JAN)0.20%-0.90%
09:30GBP Retail Sales ex-Fuel (Y/Y)(JAN)3.00%2.60%
09:30GBP Retail Sales ex-Fuel (M/M)(JAN)0.20%-1.30%
10:00Euro-Zone Trade Balance (DEC, 2018)-19.0B
13:00ECB Benoit Coeure Speaks--
13:30USD Export Price Index (M/M)(JAN)-0.1-0.6
13:30USD Import Price Index (M/M)(JAN)-0.10%-1.00%
13:30NY Empire State Manufacturing Index (FEB)7.13.9
13:30CAD Foreign Securities Purchase (DEC, 2018)7.66B9.45B
13:30USD Advance Retail Sales (M/M)(DEC, 2018)0.20%0.20%
13:30USD Core Retail Sales (M/M)(DEC, 2018)-0.50%
14:15USD Capacity Utilization (JAN)78.70%78.70%
14:15USD Industrial Production (JAN)0.10%0.30%
14:55FOMC Member Raphael Bostic speech--
14:55FOMC Member Mester Speaks--
15:00USD Michigan Consumer Sentiment (FEB 01)93.391.2
18:00USD Baker Hughes US Oil Count-854
21:00USD TIC Net Long-Term (DEC, 2018)34.5B37.6B

*All rates shown are indicative of interbank rates and should only be used for indication purposes only. It is important to note that foreign exchange rates fluctuate and that rates may vary depending on the amount and the base currency that is purchased or sold. Rates are correct as of 8:00am UK time. CentralFX are not responsible for the rates shown.