As the new week gets underway, confidence is growing that Theresa May might finally be in a position to secure a victory on her third attempt at a Brexit deal, which is lending further support to Sterling. It is clear that another rejection of the current deal will increase the risk of a lengthy delay or no Brexit at all. Intense lobbying has been reported behind the scenes, and another meaningful vote could be held today or tomorrow. The Pound is gaining on anticipation that a deal can be concluded, meaning the UK would avoid an economically damaging no-deal outcome. Failure at this juncture could leave Sterling under considerable pressure.
The Pound is holding steady against the US Dollar with the slight uncertainty over Brexit being countered by Dollar weakness ahead of Wednesday’s Federal Open Market Committee (FOMC) meeting.
The Euro is still gaining over the US Dollar in advance of the Federal Reserve meeting later this week where the Fed is expected to present a dovish monetary policy tone. With limited economic data due from the Eurozone today, this trend may continue in the short-term.
Sterling is under a little pressure against the Euro after last week’s gains, but further clarity over Brexit is arguably necessary before more meaningful direction will appear. Both the UK and Eurozone economic calendars are relatively light for the day ahead.