Sterling pushed to fresh 2-month highs on optimism that a ‘no-deal’ Brexit would-be blocked-in parliament.

The dollar registered limited net losses as European currencies held firm, although there were mixed trends among the major pairs with no clear direction.

Equity markets were mixed as trade and political uncertainty triggered cautious trading.

Sterling pushed to fresh 2-month highs on optimism that a ‘no-deal’ Brexit would-be blocked-in parliament.

The Australian dollar reversed labour-market gains after NAB increased its mortgage rates and commodity currencies registered net losses.

Oil prices were undermined by growth doubts and an unexpected build in API inventories while gold was unable to make significant headway.

Sterling held a firm tone in early Europe on Wednesday with solid buying on dips. The CBI industrial orders index declined to -1 for January from 8 previously and, although business volumes held firm, overall confidence weakened at the fastest pace since July 2016. Bank of England MPC member Broadbent offered some reassurance over the levels of household debt but did not make a significant comment on short-term monetary policy. Chief Economist Haldane stated that further limited rate hikes were likely if the economy continues to tick along as expected by the bank.

Political factors continued to have an important impact with further speculation that a disorderly Brexit would be rejected in parliament as the Labour Party suggested it was likely to back an amendment looking to prevent a ‘no-deal’ exit.

EU Chief Negotiator Barnier stated that opposition to a ‘no-deal’ outcome needed to be backed up with alternative plans.

There was, however, further Sterling demand while a GBP/USD break above 1.3000 triggered fresh short covering and a push to 10-week highs above 1.3070. GBP/EUR rose to fresh 2-month highs just shy of 1.1500 and Sterling held firm on Thursday.

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