GBPUSD began trading at 1.2515 last week, before quickly ascending to 1.28 on rumours that a Brexit deal may be in hand. Upon confirmation of a draft deal from Michel Barnier, GBP rose to 1.29 – 1.298 before stalling, ultimately pending further news from UK legislatures and Brussels. This limbo extended until the latter half of the week until it was confirmed that Boris Johnson will table a vote on his deal on what was dubbed, ‘Super Saturday’. The vote failed to materialise as the Letwin amendment took centre stage, forcing the PM’s hand, and it became uncertain that Boris would win any such vote in the commons.
If House Speaker John Bercow disallows any further Brexit debate this could fast track the Government’s decision today to reintroduce the withdrawal bill, and pressure lawmakers into voting for this deal as the spectre of ‘No deal’ looms.
With little UK data scheduled this week to punctuate the Brexit headlines we are expecting this week to be another roller-coaster ride.
De-escalation of the US-China trade war improved the overall risk picture of global markets last week as most indices posted gains. This was offset slightly as the US Retail Sales posted the first decline in 7 months, prompting fears of a consumer slowdown. The disappointing run of US data, and shift to a dovish outlook from the FED has precipitated a USD weakening across all majors the past week.
The main driver this week for USD, in the absence of scheduled data will be impromptu Twitter comments from Trump on US-China trade deal phase 2.