Risk appetite remained fragile on trade and growth fears.

Risk appetite remained fragile on trade and growth fears, especially as the US yield curve pushed deeper into inversion and there was no progress in US-China talks.

US equities declined, although futures rallied on Wednesday with only slight net losses for global indices.

The US dollar registered marginal net gains as the Euro drifted lower. Commodity currencies were undermined by on-going fears over the global economy.

Sterling continued to gain support from short covering as opposition leaders pledged to block any ‘no-deal’ Brexit.

Oil made net gains with sentiment boosted by a sharp API inventory draw. Silver pushed to 28-month highs as precious metals maintained a firm tone.

Political factors continued to have an important Sterling impact during Tuesday. Current EU Commission President Juncker stated that he was ready to engage on Brexit if the UK put forward suitable proposals.

UK opposition parties vowed to work together to try and prevent a ‘no-deal’ Brexit with the most likely mechanism fresh legislation that would force the government to request a further extension is no deal was in place.

The government insisted that it was working to find creative solutions to the Irish border issue and Sterling continued to gain net support from short covering despite no definitive developments. GBP/USD pushed to 4-week highs just above 1.2300 while GBP/EUR rallied to near 1.1100.

Chancellor Javid is set to announce a substantial fiscal spending package next week as part of the spending review which will provide an element of Sterling support, although there was a limited correction lower on Wednesday as markets continued to monitor political developments.

Economic Calendar