Chancellor Hammond remained optimistic over finding a Brexit compromise with the Labour Party.

Friday’s US GDP data was stronger than expected, but components were disappointing and inflation readings were low which undermined yield support.

The dollar reversed sharply after initial gains and registered net losses for the day with a liquidation of US longs and wider position adjustment in focus. The yen continued to gain protection from short covering ahead of the week-long Tokyo market closure.

Oil prices declined sharply as long positions were liquidated amid speculation over higher Russian production. The US S&P 500 index hit a record high, although performances elsewhere were again slightly less convincing.

Precious metals secured tentative gains as the dollar faded with limited net gains for commodity currencies.

The UK CBI industrial orders index declined to a 6-month low of -5 for April from 1 previously and below consensus forecasts with companies expecting little change in output over the next few months. There was a recovery in mortgage lending which suggested resilience in the housing sector and the overall data impact was limited.

Chancellor Hammond remained optimistic over finding a Brexit compromise with the Labour Party, although domestic factors remained limited. GBP/EUR was little changed around 1.1600 while a dollar correction pushed GBP/USD back above 1.2900. Fitch maintained its UK credit rating with a negative outlook, maintaining longer-term reservations over UK fundamentals.

CFTC data recorded a return to a slight short position which may limit the scope for further selling. Sterling edged higher on Monday as marrow ranges prevailed with markets waiting for further political developments.

Economic Calendar

13:30USD PCE Core Price Index (Y/Y)(MAR)1.70%1.80%
13:30USD PCE Core Price Index(M/M)(MAR)0.10%0.10%
13:30USD Personal Spending (M/M)(MAR)0.60%0.10%

*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.