Sterling was undermined by soft PMI services data and on-going political stresses.

The US dollar maintained a firm overall tone and secured significant net gains as other major currencies, including the Euro, again failed to impress.

Sterling was undermined by soft PMI services data and on-going political stresses.

The Australian dollar declined sharply after Reserve Bank Governor Lowe indicated that the bank had switched to a neutral stance.

Global equity markets held a firm tone with expectations of further ECB liquidity operations boosting Euro-zone bourses.

A firm dollar hampered oil prices with net losses while gold was resilient.

The UK January PMI services index declined to 50.1 from 51.2 previously and only just in expansion territory. The reading was below consensus forecasts and a 30-month low as new orders dipped into contraction territory. There was a weaker tone in employment with a slight decline for the first time in over six years with political uncertainty having a big impact in dampening activity.

The data reinforced concerns surrounding the near-term economic outlook which pushed Sterling lower and a GBP/USD break below 1.3000 triggered further short-term selling.

Prime Minister May confirmed that she will hold talks with EU Commission President Juncker and EU Council head Tusk on Thursday. There was no evidence of a breakthrough on the search for alternatives to the Northern Ireland backstop and Conservative Party tensions increased again.

GBP/USD dipped to lows around 1.2930 before stabilising while GBP/EUR dipped towards 1.1350.

There were also reports that the government had secret plans to delay the leaving date by 8 weeks and Sterling held little changed in early Europe on Wednesday with GBP/EUR around 1.1350 amid Euro losses with political developments under scrutiny.

Economic Calendar

07:00German Factory Orders (M/M)(DEC, 2018)0.30%-0.20%
13:30Nonfarm Productivity (Q/Q)1.60%2.30%
13:30CAD Building Permits (M/M)(DEC, 2018)-0.50%2.60%
13:30USD Building Permits(DEC, 2018)1.290K1.328K
13:30USD Core Retail Sales (M/M)(DEC, 2018)0.00%0.20%
13:35BoC Governor Member Timothy Lane--
15:00CAD Ivey PMI(M/M)(JAN)-59.7
15:30USD Crude Oil Inventories-0.919M
19:00Monthly Budget Statement(DEC, 2018)-8.0B-205.0B
21:45NZD Employment Change (Q/Q)0.50%1.10%
21:45NZD Unemployment Rate4.50%3.90%
23:05FOMC Governor Keith Randal Quarles Speech--
23:50JPY Buying Foreign Bonds(DEC 19, 2018)--102.6B

*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.