Prime Minister Johnson stated that he was waiting for the EU’s response to the Brexit extension request before making the next move.

Tight ranges prevailed on Wednesday with markets waiting for political developments. Equity markets secured limited net gains as energy stocks made headway with little change in bonds.

The dollar secured only marginal gains as European currencies recovered from intra-day lows. Sterling was resilient with limited gains on short covering as markets waiting for next Brexit moves.

Oil prices were boosted by favourable inventory data and hopes for deeper OPEC production cuts. Precious metals were held in tight ranges with slight net gains.

Scandinavian currencies consolidated ahead of Thursday’s central bank policy statements. Bitcoin declined sharply to 5-month lows below $7,500.

The fresh injection of Brexit uncertainty undermined Euro support to some extent and German yields also edged lower ahead of the New York open which sapped Euro support while the dollar attempted to regain some territory.

The ECB will hold its policy meeting on Thursday, and it will be Draghi’s last meeting at President. No policy changes are expected, but forward guidance will again be an important element. Markets will also be monitoring Draghi’s rhetoric closely given that he may be less restrained than usual, especially in the field of fiscal policy.

Political uncertainty continued to dominate markets on Wednesday, especially with a lack of major data releases and relatively calm global markets. Prime Minister Johnson stated that he was waiting for the EU’s response to the Brexit extension request before making the next move. There were still expectations that the government would push for a General Election in the event of a 3-month extension, although there was also speculation of a new parliamentary timetable to approve Brexit legislation. Talks between Prime Minister Johnson and Labour Leader Corbyn failed to reach agreement.

There were reports that Johnson had asked French President Macron to block an extension beyond November 15th, as uncertainty dominated with the EU likely to make a decision on Friday.

Overall volatility subsided as markets waited for fresh developments with Sterling buying on dips. After finding support below 1.2850, GBP/USD recovered to above 1.2900 while GBP/EUR consolidated around 1.1600.

Political uncertainty will continue to dominate on Thursday with Sterling holding steady in early Europe.

Economic Calendar