Sterling was hit by a correction after sharp gains over the previous 48 hours with no evidence of progress in Brexit negotiations.

The dollar secured fresh support during Friday as gains in US equity markets helped underpin sentiment while Euro confidence remained frail.

Fresh hopes over US-China trade talks underpinned risk appetite and also boosted equity markets while defensive yen demand faded during the day.

Oil prices registered significant gains as risk appetite strengthened with international benchmarks at 6-week highs as hopes for supply cuts also supported sentiment.

Commodity currencies were unable to gain significant support from firmer risk conditions and crude gains while precious metals registered net declines.

Sterling was hit by a correction after sharp gains over the previous 48 hours with no evidence of progress in Brexit negotiations.

UK retail sales volumes declined 0.9% for December compared with consensus forecasts of a 0.8% retreat and year-on-year growth was cut to 3.0% from 3.4% previously with all metrics slightly worse than expected. Confidence in the growth outlook remained weak, especially with unease concerns surrounding the housing sector as political uncertainty persisted. UK benchmark gilt yields still increased to a 6-week high, although the positive Sterling impact was offset by higher global yields.

For the week, GBP/EUR secured the sharpest advance for over 12 months, but there was a notable correction back below 1.1300 on Friday with profit taking after sharp gains as Brexit time pressures continued to increase with GBP/USD dipping below 1.2900.

Intense political speculation continued over the weekend with markets waiting for an update from Prime Minister May on Monday and further House of Commons amendments. There were reports that the government was looking to amend the Northern Ireland Good Friday agreement in order to amend the backstop, but there was little confidence that near-term progress would be made given EU opposition to contentious plans and Sterling was unable to make renewed headway on Monday with GBP/USD around 1.2875.

Economic Calendar

07:00EUR German PPI (Y/Y)(DEC, 2018)2.70%2.90%
07:00EUR German PPI (M/M)(DEC, 2018)-0.40%-0.20%
11:00German Buba Monthly Report--

*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.