The pound rose further away from 20-month lows this morning, helped by a weaker dollar and confirmation Prime Minister Theresa May will seek parliamentary approval for her much-criticised Brexit deal in mid-January. The pound has reached a high of 1.27 against the US dollar, up from a low of 1.2477 just last week and 1.1144 against the euro, up from 1.1027. PM May however faces an uphill battle in convincing her lawmakers to back her deal, she postponed a previous planned vote in parliament due to a lack of support from MP’s across all parties.
The US Dollar has been suffering losses with investors betting that growth concerns will prompt the Federal Reserve to slow its pace of interest rate hikes at this week’s meeting. Markets will scrutinise the Fed’s two-day policy meeting, which starts today, for its sense of how the economy is holding up amid a U.S.- China trade conflict and global financial market volatility.
This morning has been quiet on the hard data front with only minor releases for the euro and US dollar. Investors will likely be holding out for tomorrow’s much busier calendar. From 10.30 GMT inflation data for the UK will be released, although forecast to fall slightly, any increase would see sterling strengthen. For the US dollar, the key data will be the interest rate decision and accompanying statements. This will be announced at 8.00 GMT.