Theresa May suffered yet another setback in Parliament yesterday after some Conservative MPs rebelled against the government. A portion of the Conservative Party teamed up with Labour to pass a rule that should the Brexit deal that is currently on the table be rejected on Tuesday, the government must come back to parliament within three days with a ‘Plan B’. Three days isn’t a very long time to gain some much-needed concessions from the EU if, as expected, the Brexit deal does not pass through Parliament on Tuesday. This is causing some nerves to build on the markets surrounding Sterling, but investors are very likely to apply a wait and see approach to the pound until the outcome of the vote is clear, which should limit any large GBP fluctuations.

The US Dollar took a hit across the board yesterday but has managed to claw back some of its losses this morning ahead of a key speech later today. U.S. Federal Reserve board member, Raphael Bostic, stated yesterday that interest rates across the pond could move in either direction and he is open to an interest rate cut “if downside risks come to bear”. This made an instant impact on the value of the dollar, with the greenback falling 0.5% and 0.7% against the pound and euro respectively. Federal Reserve Chair, Jerome Powell, will be speaking this evening and this speech will now be under even closer scrutiny. Any hints towards future monetary policy in the U.S. will be listened to carefully and there is a lot of potential for movement on USD crosses during and directly after this speech.

A quiet day on the hard data front today for Sterling with no data releases of note.

Over in the Eurozone, the European Central Bank (ECB) will be releasing the minutes from their December meeting. This will be closely monitored for any ECB members changing their stance on current monetary policy.

Late this afternoon in the U.S. there will be speeches from FOMC member James Bullard and the Fed Chair Jerome Powell. With the current cloud of uncertainty surrounding the structure of future monetary policy in the U.S. these have the potential to significantly affect USD crosses.

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