Sterling edged higher as a Brexit extension was formally approved.
Global risk appetite held firm on Monday amid optimism over US-China trade talks. Global equity markets made net gains with the US S&P 500 index posting record highs.
Overall US dollar demand faded slightly as risk appetite improved, although narrow ranges prevailed. Sterling edged higher as a Brexit extension was formally approved while the House of Commons again rejected an early General Election.
Commodity currencies were underpinned by firmer risk conditions. Oil prices, however, lost ground amid underlying reservations over demand.
The yen and Swiss franc lost some ground with precious metals also undermined by firmer risk conditions as gold traded below $1,500 per ounce. The Norwegian krone posted fresh record lows.
Early in the European session, EU Council President Tusk stated that the EU had approved a flexible Brexit extension until January 31st 2020 which was accepted by the UK government. Although widely expected, the avoidance of a no-deal Brexit did have some positive Sterling impact. Firm global risk appetite also provided an element of support for the UK currency.
The CBI retail sales index improved to -10 for October from -16 previously, but this was the sixth successive negative reading. Retailers expect marginal November growth with stocks at record levels as underlying demand remained weak.
Markets continued to monitor political developments closely with attention moving back to parliament. The House of Commons rejected the government’s call for a December 12th General Election. With Prime Minister Johnson expected to make another attempt on Tuesday, there was no immediate move to bring the Brexit Bill back for debate.
Sterling maintained a steady tone with GBP/USD above 1.2850 and GBP/EUR held below 1.1590. Month-end positioning is liable to amplify volatility over the next two days, although there was little change on Tuesday ahead of further parliamentary votes.
|06:45||RBA Assistant Gov Lowe Speaks||-||-|
|09:30||GBP Consumer Credit(SEP)||0.900B||0.901B|
|09:30||GBP Mortgage Approvals(SEP)||-||65.55K|
|14:00||USD CB Consumer Confidence(OCT)||127||125.1|
|14:00||USD Pending Home Sales (M/M)(SEP)||1.70%||1.60%|
|14:00||USD Pending Home Sales (Y/Y)(SEP)||-||107.30%|