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
| Expected | Previous | ||
|---|---|---|---|
| 07:30 | Employment Level | - | 5.071M |
| 07:45 | Consumer Spending MM(JUL) | - | -0.10% |
| 07:45 | GDP Detailed QQ | - | 0.30% |
| 08:55 | German Unemployment Change(M/M)(AUG) | 2K | 1K |
| 08:55 | German Unemployment Rate(M/M)(AUG) | 5.00% | 5.00% |
| 10:00 | Euro-Zone Consumer Confidence(AUG) | - | -6.6 |
| 13:00 | Germany CPI (M/M)(AUG) | 0.30% | 0.30% |
| 13:00 | Germany CPI (Y/Y)(AUG) | 1.50% | 1.60% |
| 13:00 | Germany Harmonised CPI (M/M)(AUG) | 0.50% | 0.30% |
| 13:00 | Germany Harmonised CPI (Y/Y)(AUG) | 1.30% | 1.50% |
| 13:30 | USD GDP (Annualized) | 3.10% | 2.10% |
| 13:30 | USD GDP Price Index (Q/Q) | - | 2.50% |
| 13:30 | USD Goods Trade Balance(JUL) | - | -74.16B |
| 13:30 | CAD Current Account (Q/Q) | -18.0B | -17.4B |
| 13:30 | USD Continuing Jobless Claims | 1.680K | 1.674K |
| 13:30 | USD Initial Jobless Claims | 215K | 209K |
| 13:30 | USD Wholesale Inventories | - | 0.00% |
| 15:00 | USD Pending Home Sales (M/M)(JUL) | 0.50% | 2.80% |
| 23:45 | NZD Building Permits (M/M)(JUL) | - | NZD Building Permits (M/M)(JUL) -3.90% |