This weeks Sterling volatility continued late in to yesterday evening as the pound surged again after UK lawmakers voted to take a ‘no deal’ Brexit off the table ‘forever’. It was another night of embarrassing losses for the government as the first motion, which wasn’t backed by the government, unexpectedly passed through Parliament by 312 to 308. The pound immediately reacted to the outcome and shot up against its peers, gaining strength from the increased possibility of gaining certainty through either a deal or avoiding Brexit altogether.
All eyes will now turn to tonight’s vote on requesting an extension to Article 50, which is widely expected to comfortably pass through Parliament. Whilst this is expected and could already largely be priced in to the markets, there is still potential for further gains should this come to fruition. The pound may however struggle to hold on to its gains throughout today as markets wait to get an idea of how long a postponement could be and seek to get a better idea of future possibilities.
The US dollar gained some strength this morning, against a basket of currencies, after a very poor few days. The greenback was boosted after long term US treasury yields surprised on the upside, recovering from two-month lows.
There are no key data releases out today, therefore markets will continue to be dominated by political news.