Sterling leapt to a 10-week high yesterday after the Labour Party said it would back an attempt by lawmakers to prevent a no-deal Brexit come the 29th of March. The pound rallied as investors bet that a no-deal Brexit can be avoided if parliament exerts greater control over the process. The developments saw the pound reach a high of 1.1497 against the euro and 1.3093 against the US dollar.
If lawmakers back an amendment by Yvette Cooper in a vote scheduled for next Tuesday, this could force Theresa May to ask the EU to delay Britain’s exit from the bloc in March. The movement would need to be approved by Brussels, who could be reluctant to extend the period of uncertainty further. Although this would increase the length of uncertainty, we should see sterling gain as the chances of no deal are reduced.
On the data front, today will be heavily euro focused. This morning saw flash PMI’s for the eurozone, with both falling short of forecasts. Services released at 50.8 from 51.5 and manufacturing at 50.5 from 51.5. This afternoon Mario Draghi, president of the European Central Bank, will be holding a press conference to discuss the interest rate and the future of their monetary policy. Flash manufacturing and services PMI’s will also be released for the US from 2.45 GMT.