Sterling surrendered gains after parliament again failed to back any potential Brexit alternatives.

Despite a headline retail sales miss, firm US ISM manufacturing data boosted confidence in the US and global growth outlook. Global bond yields continued to recover with firm risk conditions also boosting equity markets

The dollar gained net ground from the data with Euro selling as a funding currency pushing EUR/USD to near 1.1200.

Oil prices were boosted by OPEC restraint and demand optimism with fresh 4-month highs for international benchmarks as WTI touched $62.0 p/b.

The Australian dollar dipped after the Reserve Bank policy statement-maintained market expectations of a 2019 rate cut, but the Canadian dollar held gains.

Sterling surrendered gains after parliament again failed to back any potential Brexit alternatives. Bitcoin spiked higher in late Asia on Tuesday.

The headline UK PMI manufacturing index rose sharply to 55.1 for March from a revised 52.1, the strongest reading for 16 months and well above consensus forecasts. There was a net improvement in business confidence, although gains in output and orders were dominated by Brexit uncertainty. Inventories of raw materials and finished goods increased at a record pace and Sterling secured only a minor advance.

There was increased traction ahead of the New York open on speculation of increased parliamentary support for a softer Brexit, although positive sentiment faded during the House of Commons debate.
The votes again recorded no majority for any of the options on offer, including a Customs Union, although there was a very narrow defeat for this option. Sterling moved sharply lower as deadlock continued with a GBP/USD slide below 1.3050 from highs near 1.3150 with GBP/EUR holding around 1.1650.

The Cabinet will hold prolonged discussions on Tuesday and EU talks will also continue to break the deadlock with Sterling securing a slight recovery ahead of a crucial Cabinet meeting.

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