The pound began the week quietly following Theresa May agreeing a deal with the EU over the weekend. Gains for the home currency were curbed by the next event on the horizon, the parliamentary vote next month. After EU leaders backed the PM’s deal for future ties with the bloc on Sunday, investors have now shifted their focus to the vote in Parliament in December. The next couple of weeks will see Mrs May seek to win over critics in both her own and the opposition parties with the odds looking stacked against her to get her agreement approved. The pounds failure to push higher indicates just how convinced markets are that the deal will be shut down by MP’s, with GBPEUR stuck below 1.13 and GBPUSD trudging even lower once again, to below 1.29.
Across the pond, comments from President Trump helped the dollar stand firm as ongoing concerns over the US-China trade war pumped optimism into the safe haven currency. Comments from Mr Trump suggested no sign of a truce between the two trading partners and weighed on global risk sentiment, giving investors reason to back the buck. Mr Trump also took the opportunity to warn those listening that a Brexit deal could hamper trade ties with the US, adding further to the short-term uncertainty of the pound.
This afternoon the US will steal most of the focus with a couple of speeches from FOMC members, Clarida at 13:30and Bostic at 19:30. Consumer confidence figures will also be announced at 15:00 before attention moves to New Zealand where the Reserve Bank will release its latest Financial Stability Report followed closely by a speech from the RBNZ’s Governor, Orr.