Sterling retreated after the UK parliamentary amendment blocking any ‘no-deal’ exit was defeated while the EU reiterated that the Withdrawal Agreement could not be re-opened.
The dollar lost ground in tight ranges with expectations of a relatively dovish Fed curbing support. EUR/USD registered slight gains without breaking resistance.
Stronger metals prices helped underpin commodity currencies with slightly higher key CPI data also supporting the Australian dollar.
Sterling retreated after the UK parliamentary amendment blocking any ‘no-deal’ exit was defeated while the EU reiterated that the Withdrawal Agreement could not be re-opened.
Precious metals held a robust tone with gold strengthening to 8-month highs and silver at 6-month highs.
Venezuelan tensions helped underpin oil prices and offset on-going demand concerns.
There was choppy Sterling trading in early Europe on Tuesday amid on-going political uncertainty, although speculation over increased potential for compromise curbed potential selling interest. The UK currency also regained some ground after the Labour Party confirmed that it would back an Amendment which would block a ‘no-deal’ Brexit. Prime Minister May stated that she would re-open the Withdrawal Agreement with the EU if parliament gave a clear signal.
Sterling lost traction into the European close with wariness over potential month-end selling also a potentially negative factor.
The UK currency dipped sharply after the Cooper amendment, which would have forced a ‘no-deal’ Brexit outcome to be ruled out if there was no agreement by late February, was defeated. Markets were therefore, less confident that ‘no-deal’ would be avoided which pushed the currency lower.
The Brady Amendment was passed which approved the Brexit deal if backstop changes were made, but a quick EU reiteration that the Withdrawal Agreement could not be re-opened kept Sterling on the defensive with 1.3060 GBP/USD lows as GBP/EUR pulled back to just above 1.1400.
The UK currency stabilised on Wednesday, although it still held net losses given tough EU rhetoric with no impact from stronger rises in shop prices data to a 6-year high.
Economic Calendar
| Expected | Previous | ||
|---|---|---|---|
| 07:00 | German GfK Consumer Confidence (FEB) | 10.3 | 10.4 |
| 08:00 | CHF KOF Leading Indicator(JAN) | 97 | 96.3 |
| 09:30 | GBP Mortgage Approvals(DEC, 2018) | 63.00K | 63.73K |
| 13:00 | Germany Harmonised CPI (M/M)(JAN) | -1.00% | 0.30% |
| 13:00 | Germany Harmonised CPI (Y/Y)(JAN) | 1.70% | 1.70% |
| 13:00 | Germany CPI (Y/Y)(JAN) | 1.60% | 1.70% |
| 13:00 | Germany CPI (M/M)(JAN) | -0.90% | 0.10% |
| 13:15 | USD ADP Employment Change(JAN) | 175K | 271K |
| 13:30 | USD GDP (Annualized) | 3.30% | 3.40% |
| 13:30 | USD GDP Price Index (Q/Q) | 1.70% | 1.50% |
| 15:00 | USD Pending Home Sales (M/M)(DEC, 2018) | 0.50% | -0.70% |
| 15:30 | USD Crude Oil Inventories | - | 7.970M |
| 19:00 | FOMC Interest Rate Decision | 2.50% | 2.50% |
| 19:00 | USD FOMC Statement | - | - |
| 19:30 | FOMC Press Conference | - | - |
| 23:50 | JPY Industrial Production (M/M)(DEC 08, 2018) | - | - |