Sterling was hit by profit taking after strong gains and no overt positive Brexit developments.
Firm US data underpinned the dollar with USD/JPY strengthening to 10-week highs on Friday as defensive yen support faded.
A slight increase in Euro-zone confidence protected the Euro as German yields moved higher with EUR/USD little changed overall.
Sterling was hit by profit taking after strong gains and no overt positive Brexit developments.
Stronger than expected Chinese Caixin PMI data boosted risk appetite on Friday with global equities pushing to 4-month highs amid slightly increased confidence in the global economy.
Oil prices also gained on demand hopes with global benchmarks close to 3-month highs.
Precious metals continued to move lower amid a solid dollar tone and higher bond yields with gold at 2-week lows.
Sterling maintained a firm tone in early Europe on Thursday, although it was unable to secure further gains as pressure for profit taking increased with further selling interest above 1.3300 in GBP/USD.
A junior government minister resigned in order to campaign for the Brexit deal to be approved before March 29th and officials downplayed the potential for any meaningful vote to be held next week. There was little catalyst for fresh Sterling buying despite some evidence that opposition to the Withdrawal Agreement within the Conservative Party was fading slightly. EU chief negotiator Barnier stated that there needed to be a good reason for a Brexit delay.
Despite some support in US trading from gains in oil prices, GBP/USD dipped to lows near 1.3250 while GBP/EUR dipped from 21-month highs to trade near 1.1650. Sterling was also hampered by evidence that the US would take a tough stance in trade talks with the UK and was unable to make headway on Friday with markets wary over pre-weekend position adjustment.
Economic Calendar
| Expected | Previous | ||
|---|---|---|---|
| 07:30 | CHF Retail Sales (Y/Y)(JAN) | - | -0.30% |
| 08:30 | CHF SVME PMI(FEB) | 55.8 | 54.3 |
| 08:45 | Markit/ADACI Mfg PMI(FEB) | 47.4 | 47.8 |
| 08:50 | Markit Mfg PMI(FEB) | 51.4 | 51.4 |
| 08:55 | EUR German Manufacturing PMI (M/M)(FEB) | 47.6 | 47.6 |
| 08:55 | German Unemployment Change(M/M)(FEB) | -5K | -2K |
| 08:55 | German Unemployment Rate(M/M)(FEB) | 5.00% | 5.00% |
| 09:00 | Euro-Zone PMI Manufacturing(FEB) | 49.2 | 49.2 |
| 09:30 | GBP PMI Manufacturing(FEB) | 52 | 52.8 |
| 09:30 | GBP Mortgage Approvals(JAN) | 63.50K | 63.79K |
| 10:00 | Euro-Zone CPI (Y/Y)(FEB) | 1.50% | 1.40% |
| 10:00 | Euro-Zone Unemployment Rate(JAN) | 7.90% | 7.90% |
| 10:00 | Euro-Zone Core CPI (Y/Y)(FEB 15) | 1.10% | 1.10% |
| 13:30 | USD PCE Core Price Index (Y/Y)(DEC, 2018) | 1.90% | 1.90% |
| 13:30 | USD PCE Core Price Index(M/M)(DEC, 2018) | 0.10% | 0.10% |
| 13:30 | USD Personal Income (M/M)(JAN) | 0.30% | 0.20% |
| 13:30 | USD Personal Spending (M/M)(DEC, 2018) | 0.10% | 0.40% |
| 13:30 | CAD GDP Annualized (Q/Q) | - | 2.00% |
| 13:30 | CAD GDP (M/M)(DEC, 2018) | - | -0.10% |
| 14:30 | CAD RBC Manufacturing PMI(FEB) | - | 53 |
| 14:45 | USD Manufacturing PMI(FEB) | - | 53.7 |
| 15:00 | US Manufacturing ISM(M/M)(FEB) | 56 | 56.6 |
| 15:00 | USD Michigan Consumer Sentiment(FEB 08) | 95.6 | 95.5 |
| 17:50 | FOMC Member Raphael Bostic speech | - | - |
| 18:00 | USD Baker Hughes US Oil Count | - | - |