Prime Minister May and EU Commission President Juncker were said to have made good progress on amendments to the political declaration.

Risk appetite held firm on Monday on US-China trade hopes, although equity markets retreated from their best levels as US and global growth doubts persisted.

The yen also regained some ground on Tuesday given the more cautious risk tone and hesitation ahead of key risk events.

Sterling strengthened to 4-week highs on increased speculation over a move by Prime Minister May to rule out a ‘no-deal outcome and delay Brexit.

Oil prices dipped sharply following comments from President Trump that prices were moving too high again which sapped support for commodity currencies.

Precious metals were little changed while cryptocurrencies failed to regain ground.

Bank of England Governor Carney stated that the biggest risk for financial stability would be a ‘no-deal’ Brexit, although he also adopted a more positive stance on the medium-term outlook which cushioned Sterling.

Prime Minister May and EU Commission President Juncker were said to have made good progress on amendments to the political declaration. Sterling continued to gain some support from expectations that a ‘no-deal’ situation would be ruled out, although there was still very choppy trading given intense uncertainty surrounding parliamentary manoeuvres.

Around the European close, there were reports that the opposition Labour Party would back a second referendum which triggered fresh Sterling gains even though it was a political tactic to block May’s proposed deal.

The Prime Minister will make a House of Commons statement on Tuesday with increased speculation that she will move closer to ruling out a ‘no-deal’ outcome and pledge an extension of the Article 50 timetable if necessary. As rumours increased, Sterling pushed to 4-week highs with a GBP/USD move above 1.3100 and held above this level on Tuesday while EUR/GBP rose to 1.1560.

Economic Calendar