Sterling continued to gain support from expectations that a ‘no-deal’ Brexit would be ruled out with the trade-weighted index hitting 10-month highs.

There was mixed dollar trading with limited gains on the back of declines in commodity currencies as markets monitored US political developments.

Sterling continued to gain support from expectations that a ‘no-deal’ Brexit would be ruled out with the trade-weighted index hitting 10-month highs. Brexit hopes also helped protect Euro sentiment with little net EUR/USD change.

Risk appetite faltered after Chinese PMI manufacturing reinforced global growth doubts and equity markets registered limited net losses.

Oil prices were boosted by a sharp decline in crude inventories, but demand concerns limited support with limited losses on Thursday.

Precious metals edged lower with a lack of significant defensive support.

Sterling continued to push higher during Wednesday as markets maintained a more optimistic Brexit stance. There were further expectations that a ‘no-deal’ outcome would be ruled out within parliament which underpinned sentiment. There was a significant increase in UK bond yields which also helped underpin Sterling, although the impact was offset by higher yields in other major markets. The trade-weighted index strengthened to a 10-month high with an 8-month GBP/USD peak near 1.3350.

The government survived the series of votes in the House of Commons, maintaining expectations that a disruptive Brexit would be avoided on March 29th. There was also speculation that there would be a meaningful vote next week. The UK currency was vulnerable to a correction, although it held the bulk of daily gains as GBP/EUR posted fresh 21-month highs above 1.1650 before a limited correction.

There was a notable decline for the Lloyds business confidence index while consumer confidence stabilised. GBP/USD consolidated near 1.3300 on Thursday with the potential for choppy trading on month-end pressures.

Economic Calendar

07:00GBP Nationwide House Prices (Y/Y)(FEB)0.40%0.10%
07:00GBP Nationwide House Prices (M/M)(FEB)-0.30%
07:45Consumer Spending MM(JAN)--1.50%
07:45GDP Detailed QQ0.30%0.30%
08:00CHF KOF Leading Indicator(FEB)-95
09:00Consumer Price Prelim MM(FEB)0.20%0.10%
09:00Consumer Price Prelim YY(FEB)1.10%0.90%
09:00CPI (EU Norm) Prelim MM(FEB)-0.10%-1.70%
09:00CPI (EU Norm) Prelim YY(FEB)1.20%0.90%
13:00FOMC Member Richard Harris Clarida Speech--
13:00Germany Harmonised CPI (M/M)(FEB)--1.00%
13:00Germany Harmonised CPI (Y/Y)(FEB)1.80%1.70%
13:00Germany CPI (Y/Y)(FEB)1.50%1.40%
13:00Germany CPI (M/M)(FEB)0.50%-0.80%
13:30USD GDP (Annualized)2.40%3.40%
13:30USD GDP Price Index (Q/Q)1.70%1.50%
13:30CAD Current Account (Q/Q)-11.5B-10.3B
13:30CAD RMPI (M/M)(JAN)-3.80%
13:30USD Continuing Jobless Claims(FEB 02)1.733K1.725K
13:30USD Initial Jobless Claims(FEB 02)221K216K
13:50FOMC Member Raphael Bostic speech--
14:45USD Chicago PMI(FEB)58.256.7
16:00FOMC Harker Speech--
18:00FOMC Robert Kaplan Speech--
21:45NZD Building Permits (M/M)(JAN)-5.10%
22:30AUD AiG Performance of Manufacturing Index(FEB)-52.5
23:30JPY Unemployment Rate(JAN)2.42.4

*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.