The House of Commons overnight voted to hold a raft of indicative votes on the next steps for Brexit. 329 to 302 voted against the government including thirty Tory MP’s. Another bad night for Theresa May who also received three letters of resignation from her party.
At the time of writing information is still yet to be released on the format of the indicative voting process and what will actually be voted for. The motions are likely to lean towards a softer Brexit in a number of forms and a second referendum. The Prime Minister is now in a very difficult position, as legally she does not need to adhere to the outcome of the votes, however it will be difficult not to. These votes are scheduled to take place tomorrow.
The situation is however still unchanged in the fact that the three main options still remain open such as opt for the deal, break out with no deal or have no Brexit at all.
The Pound therefore remains volatile – albeit in a fairly small range – and it is difficult to predict the next move in the current environment.
There is little in the way or economic data on the docket for today and therefore direction will be driven by the Brexit sentiment.
The Euro is marginally stronger this morning as risk sentiment ebbs and flows on the back of the trade war between the US and China and general concern over global growth. The single currency has held firm even though the ECB continues to make comments that it sees the slowdown as more of a long-term situation than a short term phase. This can be down to the fact that the Trade war and Brexit remain the focal points in the market currently.
The Dollar is currently a mixed bag across a basket of currencies as the ‘risk on’ sentiment has seen traders move out of the Dollar and into riskier currencies. The Dollar is being closely monitored alongside the US Treasury yields as the yield curve inverted – this has been a signal of recession in the past.
We are expecting consumer confidence numbers and building permits for February this afternoon to give this currency direction.
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