Sterling was again supported by hopes that a ‘no-deal’ Brexit deal would be avoided and that EU concessions could be secured.

The US dollar dipped sharply during Friday despite a suspension of the US government shutdown as expectations of a more dovish Fed sapped support.

Sterling was again supported by hopes that a ‘no-deal’ Brexit deal would be avoided and that EU concessions could be secured.

US and European equity markets registered net gains, although Asian markets faded on Monday with caution on US-China trade talks.

Gains in oil prices helped support commodity currencies, although a weaker US currency had a bigger impact in triggering notable gains.

Gold pushed to 7-month highs on dollar losses with silver also advancing strongly.

UK high street lending data was close to expectations while retailers remained cautious with a CBI survey reading of 0 from -13 the previous month, although there was notable optimism for February and political events tended to dominate.

There was further evidence of increased parliamentary support the government’s Withdrawal Agreement if the Northern Ireland backstop was amended or withdrawn. There was also further speculation of increased support for Amendments to Tuesday’s government Bill which would block any ‘no-deal’ Brexit. With some signs that the EU would be willing to shift its position on a clear signal from the UK, Sterling held a firm overall tone.

There was also evidence of reduced market fear with implied volatilities declining to fresh 2-month lows. GBP/USD pushed to 11-week highs just above 1.3200 with fresh 9-month GBP/EUR highs at around 1.1600.

Sterling was unable to make further headway on Monday following weekend comments from Irish Foreign Minister Coveney that the Irish backstop had to remain, and GBP/USD was held just below 1.3200 while GBP/EUR rallied towards1.1600 as markets monitored political rhetoric ahead of Tuesday’s House of Commons votes.

Economic Calendar

13:30USD Chicago Fed National Activity Index(DEC, 2018)-0.22
14:00ECB President Mario Draghi's Speech--
14:30BoE Gov Carney Speaks--
21:45NZD Trade Balance (M/M)(DEC, 2018)--861M
21:45NZD Trade Balance (Y/Y)(DEC, 2018)--5420M

*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.