Politics remained a key driver with some support from reports that Labour would officially back the Cooper Amendment to block a ‘no-deal exit.

US CPI data was slightly stronger than expected with the core rate above 2.0% which dampened expectations of a very dovish Fed stance this year.

The dollar secured fresh gains as yields edged higher while other major currencies failed to capitalise on earlier gains with EUR/USD back below 1.1300 while lower inflation undermined Sterling.

Stronger than expected Chinese trade data helped underpin risk appetite, although equity markets ran into resistance after posting 4-month highs.

Precious metals dipped sharply lower in US trading on Wednesday.

Oil prices made net limited gains as Saudi Arabia pledged to cut production further next month.

The Swedish krona made limited net gains as the Riksbank held forward guidance steady following the policy meeting.

UK consumer prices declined 0.8% in January due to lower energy prices and the year-on-year inflation rate declined to 1.8% from 2.1%. This was slightly below consensus forecasts of 1.9% and the lowest reading since February 2017. The core rate was unchanged at 1.9% with little change in the producer prices. Sterling had edged lower into the release which limited the reaction, although it still tended to drift lower as futures markets indicated a reduced chance of a rate hike this year.

Politics remained a key driver with some support from reports that Labour would officially back the Cooper Amendment to block a ‘no-deal exit. The UK currency also jumped higher amid rumours of a formal move to extend Article 50, but quickly retreated to post net losses after failing to hold above 1.2930 against the dollar.

Sterling failed to capitalise on the firm tone in oil prices and solid risk appetite with GBP/EUR continuing to hold around the 1.1400 area, while GBP/USD dipped to lows below 1.2850. UK data remained fragile with the headline RICS housing survey deteriorating to -22 from -19 previously and the weakest reading since July 2012. Sterling was little changed on Thursday with GBP/USD around 1.2870 amid tensions ahead of parliamentary votes later in the day.

Economic Calendar

07:00Germany GDP (Y/Y)0.90%0.90%
07:00Germany GDP (Q/Q)0.10%-0.20%
07:30CHF PPI (M/M)(JAN)--0.60%
07:30CHF PPI (Y/Y)(JAN)-0.60%
10:00Euro-Zone GDP (Y/Y)1.70%1.20%
10:00Euro-Zone GDP (Q/Q)0.20%0.20%
13:30USD PPI Ex Food & Energy (Y/Y)(JAN)2.90%2.70%
13:30USD PPI Ex Food & Energy (M/M)(JAN)0.20%-0.10%
13:30USD PPI (M/M)(JAN)-0.10%-0.20%
13:30USD PPI (Y/Y)(JAN)2.50%2.50%
13:30CAD Manufacturing Shipments (M/M)(DEC, 2018)--1.40%
13:30CAD New Housing Price Index (M/M)(DEC, 2018)-0
13:30USD Continuing Jobless Claims(JAN 19)--
13:30USD Initial Jobless Claims(JAN 19)--
13:30USD Advance Retail Sales (M/M)(DEC, 2018)0.10%0.20%
15:00USD Business Inventories(NOV, 2018)0.30%0.60%
16:00FOMC Harker Speech--
20:45RBA Assistant Governor Kent Speaks--
21:30NZD Business NZ PMI(JAN)-55.1
23:50JPY Buying Foreign Bonds(DEC 26, 2018)-915.3B

*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.