Sterling continued to strengthen in European trading on Tuesday with expectations that Prime Minister May would shift her stance in her parliamentary statement.
Fed Chair Powell’s testimony had limited impact with a reiteration of the patient stance while US consumer and business survey data was strong.
Despite firm data, the dollar retreated to 3-week lows as a recovery in European sentiment and lower US yields curbed demand.
Sterling pushed sharply higher with 21-month highs against the Euro as Prime Minister May confirmed that parliament would be able to block a ‘no-deal’ Brexit.
Global equity markets held firm, although further buying support was limited given the recent price gains.
Oil prices secured limited gains as OPEC maintained a commitment to output curbs.
Precious metals were unable to make headway and held in narrow ranges.
There was little impact from Bank of England Governor Carney’s testimony to the Treasury Select Committee as he was questioned primarily on the implications of any ‘no-deal Brexit outcome with markets focussed on political manoeuvring.
Sterling continued to strengthen in European trading on Tuesday with expectations that Prime Minister May would shift her stance in her parliamentary statement. May confirmed that the House of Commons would be given votes on delaying Brexit or ruling out the possibility of a no-deal outcome if there was no agreement to approve the Withdrawal Agreement by March 12th.
She reiterated that she did not want to see Article 50 extended and there was some tentative evidence of a shift towards backing the Withdrawal Agreement.
From a market perspective, there were stronger expectations that a no-deal would be ruled out and, after a brief correction, Sterling strengthened sharply. EU officials indicated that a Brexit delay until the end of June could be accepted, but not beyond.
GBP/USD hit 5-month highs above 1.3280 and the GBP/EUR continued to rise towards 1.1650, the weakest reading since May 2017, before a limited correction on Wednesday ahead of the parliamentary debate.
Economic Calendar
| Expected | Previous | ||
|---|---|---|---|
| 08:00 | Business Confidence(FEB) | - | 102.1 |
| 08:00 | Consumer Confidence(FEB) | - | 114 |
| 08:30 | ECB Benoit Coeure Speaks | - | - |
| 09:00 | CHF ZEW Expectations(FEB) | - | -44 |
| 10:00 | German Buba President Weidmann speech | - | - |
| 10:40 | German 10-y Bond Auction | - | 0.20% |
| 13:15 | USD ADP Employment Change(FEB) | - | 213K |
| 13:30 | USD Durable Goods Orders (M/M)(JAN) | 0.20% | 1.00% |
| 13:30 | USD Durable Goods Orders Ex Transportation(JAN) | 0.30% | -0.20% |
| 13:30 | USD Goods Trade Balance(NOV, 2018) | - | -76.98B |
| 13:30 | Bank of Canada Core CPI (M/M)(JAN) | - | -0.20% |
| 13:30 | Bank of Canada Core CPI (Y/Y)(JAN) | - | 1.70% |
| 13:30 | CAD CPI (M/M)(JAN) | - | -0.10% |
| 13:30 | CAD CPI (Y/Y)(JAN) | 1.70% | 2.00% |
| 15:00 | USD Factory Orders(DEC, 2018) | 0.90% | -0.60% |
| 15:00 | USD Pending Home Sales (M/M)(JAN) | 0.50% | -2.20% |
| 15:00 | Fed's Chair Powell Testifies | - | - |
| 15:30 | USD Crude Oil Inventories | - | 3.672M |
| 23:50 | JPY Retail Trade (Y/Y)(JAN) | 1.10% | 1.30% |
| 23:50 | JPY Buying Foreign Bonds(JAN 09) | - | 193.7B |
| 23:50 | JPY Industrial Production (M/M)(JAN 22) | -2.40% | -0.10% |