Sterling declined sharply after government moves to suspend parliament.

The US dollar held a firm tone during Wednesday amid a lack of attractive alternatives and European losses with no major data releases.

The Euro was unable to draw support from agreement to form a new Italian government coalition with German yields at record lows.

Sterling declined sharply after the government moves to suspend parliament for over four weeks from around September 10th.

Commodity currencies maintained a soft tone amid unease over global growth and trade trends. Oil was unable to hold gains triggered by a large inventory draw as demand concerns sapped underlying support.

Silver pushed to 28-month highs as underlying demand for precious metals held firm. Bitcoin spiked lower to trade below the $10,000 level.

Sterling retreated sharply in early Europe on Wednesday following reports that parliament would be prorogued or suspended from around September 10th until October 14th when the government would present a Queen’s Speech of new policies. The move, confirmed later by the Queen, will make it more difficult for parliament to block any ‘no-deal’ Brexit with a severe lack of debating time.

Political tensions also intensified immediately with strong protests against the move from opposition politicians and expectations of a no-confidence vote against the government next week increased.

GBP/USD dipped to lows below 1.2170 while GBP/EUR dipped back towards 1.1000. EU sources suggested that the risk of a ’no-deal’ outcome had increased and rhetoric remained intense, but Sterling was able to recover some ground as GBP/EUR hit selling interest above 1.1100 while GBP/USD settled just above 1.2200. Political developments will continue to be monitored very closely with further choppy trading likely.

Economic Calendar

07:30Employment Level-5.071M
07:45Consumer Spending MM(JUL)--0.10%
07:45GDP Detailed QQ-0.30%
08:55German Unemployment Change(M/M)(AUG)2K1K
08:55German Unemployment Rate(M/M)(AUG)5.00%5.00%
10:00Euro-Zone Consumer Confidence(AUG)--6.6
13:00Germany CPI (M/M)(AUG)0.30%0.30%
13:00Germany CPI (Y/Y)(AUG)1.50%1.60%
13:00Germany Harmonised CPI (M/M)(AUG)0.50%0.30%
13:00Germany Harmonised CPI (Y/Y)(AUG)1.30%1.50%
13:30USD GDP (Annualized)3.10%2.10%
13:30USD GDP Price Index (Q/Q)-2.50%
13:30USD Goods Trade Balance(JUL)--74.16B
13:30CAD Current Account (Q/Q)-18.0B-17.4B
13:30USD Continuing Jobless Claims1.680K1.674K
13:30USD Initial Jobless Claims215K209K
13:30USD Wholesale Inventories-0.00%
15:00USD Pending Home Sales (M/M)(JUL)0.50%2.80%
23:45NZD Building Permits (M/M)(JUL)-NZD Building Permits (M/M)(JUL) -3.90%

*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.