The brief gains made by the pound yesterday morning were swiftly wiped out in the afternoon as Mark Carney addressed an audience. Sterling traded flat on the day after the Bank of England warned investors of the dangers of leaving the EU in a ‘disorderly’ manner with the Governor citing crashing out of the bloc as a greater risk to Britain than the financial crisis. The bank cautioned that the economy could contract by as much as 8 percent in a year should a no-deal scenario materialise, and the pound wobbled on the assessment, trading at 1.1280 against the euro after Mr Carney’s comments.

The dollar lost ground against its major rivals yesterday as markets interpreted Fed Chairman Jerome Powell’s comment that US interest rates were just below neutral as a signal that the current rate-hiking cycle is coming to an end. The remarks sent the dollar lower against the pound and euro, with cable moving back above 1.28 after falling through this level earlier in the week. EURUSD moved in the same way with the single currency gaining close to a cent on the greenback.

Data released this morning from the UK and EU has once more been overshadowed by Theresa May taking questions from a committee of MP’s about her Brexit deal. The PM encouraged MP’s to ‘focus on the choice that lies in front of them’ and to ignore other potential options. Mrs May reiterated that the only deal on the table was the one she has negotiated. This evening FOMC minutes set for release will be focused on again with close attention being paid following the change of tone from the Fed yesterday.

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