Sterling dipped lower ahead of the New York open following a government spokesman comment that a way forward in Brexit talks with the Labour Party had yet to be found.

The dollar drifted lower despite solid spending data with a decline in the Federal Reserve’s preferred inflation measure eroding support ahead of Wednesday’s Fed statement.

European currencies were able to secure limited gains, although sentiment remained cautious at best. Equity markets remained firm with the S&P 500 index posting a fresh record high on Monday.

Risk appetite was, however, hampered by the weaker than expected Chinese PMI data as equity markets stalled while the yen secured some defensive support.

Oil prices secured tentative gains despite China’s data while precious metals were unable to make any headway.

Trepidation over month-end positioning limited overall activity across asset classes.

Sterling dipped lower ahead of the New York open following a government spokesman comment that a way forward in Brexit talks with the Labour Party had yet to be found. Markets were wary of month-end positioning which could trigger some Sterling selling pressure. GBP/USD dipped to lows near 1.2900 before edging back into positive territory while GBP/EUR strengthened slightly to just below 1.1575 with a lack of domestic factors.

There were very strong expectations that the Bank of England would maintain interest rates at 0.7% with Brexit uncertainty continuing to limit central bank options. The Lloyds Bank business barometer strengthened to 14 for April from 10 previously which suggested a net improvement in the outlook, although consumer confidence was unchanged at -13. Sterling edged higher on Tuesday as the dollar corrected weaker, but there was GBP/USD resistance near 1.2950 while EUR/GBP was little changed.

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