Sterling briefly gained on Brexit hopes, but gains retreated rapidly amid a hostile reception to latest government plans.

The dollar held a firm tone around 3-week highs as alternative currencies failed to generate sustained interest with EUR/USD settling little changed just above 1.1150.

Equity markets advanced on Tuesday on hopes for an easing in trade tensions, although momentum stalled on Wednesday given concerns over tech-sector restrictions.

Sterling briefly gained on Brexit hopes, but gains retreated rapidly amid a hostile reception to latest government plans. Sterling losses also hampered the Euro.

The Canadian dollar maintained a firm tone after last week’s deal to remove US steel tariffs.
Oil prices were hurt by an unexpected build in the API inventories data and demand doubts. Precious metals were unable to make headway with gold at 3-week lows.

The UK CBI industrial orders index declined to -10 for May from -5 previously which was below consensus forecasts and the weakest reading since October 2016. Exports also declined, although there was a net increase in output.

Sterling remained under pressure ahead of the New York open as wider US currency strength and on-going political concerns sapped support with a GBP/USD dip to 5-week lows below 1.2700 while GBP/EUR dipped near 1.1380.

Prime Minister May secured Cabinet approval for the revised Brexit Withdrawal Agreement and, ahead of a formal announcement, there was speculation that it would include a customs union or confirmatory referendum and Sterling moved sharply higher with a GBP/USD move to near 1.2800. The details fell short of market speculation, although parliament would get the chance to vote for a second vote if the Withdrawal Agreement is approved. Reaction to proposals was also generally very negative and Sterling retreated very quickly as optimism collapsed.

GBP/USD was just below 1.2700 on Wednesday ahead of the latest UK inflation data with GBP/EUR near 1.1380 on expectations of a further challenge to May’s leadership this weekend.

Economic Calendar

Expected Previous
08:30 ECB President Mario Draghi's Speech - -
09:30 GBP PPI Core Output (Y/Y)(APR) 2.2 2.2
09:30 GBP Core CPI (Y/Y)(APR) 1.90% 1.80%
09:30 GBP CPI (M/M)(APR) 0.30% 0.20%
09:30 GBP CPI (Y/Y)(APR) 2.00% 1.90%
09:30 GBP PPI Input (M/M)(APR) 0.30% -0.20%
09:30 GBP PPI Output (Y/Y)(APR) 2.10% 2.40%
09:30 GBP Public Sector Net Borrowing(APR) - 0.84B
10:30 ECB Praet Speech - -
12:00 USD MBA Mortgage Applications 2.70% -0.60%
13:30 CAD Retail Sales Ex Autos (M/M)(MAR) 0.20% 0.60%
13:30 CAD Retail Sales (M/M)(MAR) 0.40% 0.80%
15:00 FOMC member John C. Williams speech - -
15:10 FOMC Member Raphael Bostic speech - -
15:30 USD Crude Oil Inventories -2.530M 5.431M

*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.