Sterling continued to be hampered by political uncertainty as the EU took a tough stance on re-opening the Withdrawal Agreement.
The Federal Reserve held interest rates and dropped references to further gradual rate hikes being appropriate and reiterated patience. The overall stance was more dovish than consensus expectations.
The dollar dipped lower after the statement with the currency index close to 2019 lows as EUR/USD tested above 1.1500.
Global equities strengthened on US gains, although Chinese reservations persisted.
Oil prices secured strong gains with supply concerns helping WTI advance to 2-month highs.
Commodity currencies were boosted by US dollar weakness and stronger commodity prices.
Precious metals also advanced with gold at fresh 8-month highs.
Sterling continued to be hampered by political uncertainty as the EU took a tough stance on re-opening the Withdrawal Agreement.
UK mortgage approvals data was slightly above consensus forecasts and consumer borrowing data was also above market expectations which suggested firm demand, although Sterling failed to benefit amid Brexit concerns.
EU Chief Negotiator Barnier stated that the Brexit deal cannot be renegotiated, especially on the backstop, although he was confident of finding an agreement before March 29th. Prime Minister May’s office stated that it would not be an easy process reopening the withdrawal Agreement and would need to work with the EU to find agreement.
Markets overall were concerns that deadlock would persist for now, especially with the EU unwilling to engage in fresh discussions. Sterling did gain some protection from firm equity markets and gains in oil prices with GBP/USD strengthening back above 1.3100 from 1.3060 on dollar losses while GBP/EUR held just above 1.1400.
UK data recorded a slight recovery in the Lloyds business barometer from 30-month lows while consumer confidence held at 5-year lows. Sterling overall was little changed on Thursday with GBP/USD edging higher to 1.3140.
Economic Calendar
| Expected | Previous | ||
|---|---|---|---|
| 07:00 | EUR German Retail Sales (Y/Y)(DEC, 2018) | - | 1.10% |
| 07:00 | EUR German Retail Sales (M/M)(DEC, 2018) | -0.60% | 1.40% |
| 07:00 | GBP Nationwide House Prices (Y/Y)(JAN) | 0.00% | 0.50% |
| 07:00 | GBP Nationwide House Prices (M/M)(JAN) | 0.20% | -0.70% |
| 08:55 | German Unemployment Change(M/M)(JAN) | -10K | -14K |
| 08:55 | German Unemployment Rate(M/M)(JAN) | 5.00% | 5.00% |
| 10:00 | Euro-Zone Unemployment Rate(DEC, 2018) | 7.90% | 7.90% |
| 10:15 | European Central Bank Yves Mersch Speech | - | - |
| 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) | 0.20% | 0.10% |
| 13:30 | CAD GDP (M/M)(NOV, 2018) | - | 0.30% |
| 13:30 | CAD RMPI (M/M)(DEC, 2018) | - | -11.70% |
| 13:30 | USD Personal Spending (M/M)(DEC, 2018) | 0.30% | 0.40% |
| 13:30 | USD Continuing Jobless Claims(JAN 05) | 1.735K | 1.713K |
| 13:30 | USD Initial Jobless Claims(JAN 05) | 211K | 199K |
| 14:45 | USD Chicago PMI(JAN | 62.3 | 65.4 |
| 17:45 | Gov Council Member Wilkins Speaks | - | - |
| 21:30 | AUD AiG Performance of Manufacturing Index(JAN) | - | 49.5 |