Sterling failed to sustain gains given a lack of positive Brexit news during the day.

The US dollar secured net gains during Monday with support on yield grounds while other major currencies failed to attract support.

The Euro was undermined by expectations of a dovish ECB stance with EUR/USD at 2-week lows.

Sterling failed to sustain gains given a lack of positive Brexit news during the day.

Global equities overall lost ground with unease over earnings trends, although Chinese equities provided some relief on expectations of fiscal support.

There was choppy trading in oil prices with a reversal of robust intra-day gains as demand concerns offset OPEC supply cuts.

Precious metals continued to lose ground with gold at 5-week lows before a tentative recovery.

The UK PMI construction index declined to 49.5 for February from 50.6, below consensus estimates and the weakest reading since March 2018 when activity was hurt by adverse weather. Brexit-related uncertainty was a significant factor undermining the commercial sector while raw-material shortages were also a feature and the data undermined Sterling support.

UK government sources indicated that a meaningful House of Commons vote was very unlikely to be held this week. Overall, Sterling was hampered by a lack of positive rhetoric during the day with no evidence that Prime Minister May had made headway in securing parliamentary support. Attorney General Cox denied that he had given up attempts to force a specific time frame to end the backstop, but uncertainty prevailed.

In this environment, GBP/USD retreated back below the 1.3200 level and failed to regain this level during the New York session while EUR/GBP moved back above the 1.1600 level.

Latest consumer spending data was subdued with BRC reporting a 0.1% annual decline in like-for-like sales and Sterling was unable to regain ground with a GBP/USD dip to near 1.3150. Cox and Brexit Secretary Barclay will hold further talks with the EU on Tuesday and Sterling was unable to regain ground on Tuesday ahead of the services PMI data.

Economic Calendar

Expected Previous
07:30 CHF CPI (M/M)(FEB) 0.40% -0.30%
07:30 CHF CPI (Y/Y)(FEB) 0.60% 0.60%
08:45 Markit/ADACI Svcs PMI(FEB) 49.5 49.7
08:50 Markit Serv PMI(MAR) 49.8 49.8
08:55 EUR German PMI Composite(FEB) 52.7 52.7
08:55 EUR German PMI Services(FEB) 55.1 55.1
09:00 Euro-Zone PMI Composite(FEB) 51.4 51.4
09:00 Euro-Zone PMI Services(FEB) 52.3 52.3
09:00 GDP Prelim QQ -0.20% -0.20%
09:00 GDP Prelim YY 0.10% 0.10%
09:30 GBP PMI Services(FEB) 49.9 50.1
10:00 Euro - Zone Retail Sales (Y/Y)(JAN) 1.80% 0.80%
10:00 Euro - Zone Retail Sales (M/M)(JAN) 1.00% -1.60%
14:45 USD Markit Services PMI(FEB) 56.2 56.3
14:45 USD Markit PMI Composite(FEB) 55.8 55.8
15:00 USD ISM Non-Manufacturing PMI(FEB) 57.2 56.7
15:00 USD New Home Sales Change(DEC, 2018) -8.70% 16.90%
15:00 USD New Home Sales(DEC, 2018) 593M 657M
15:00 CAD Ivey PMI(M/M)(FEB) - 54.7
19:00 Monthly Budget Statement(JAN) -11.0B -14.0B
22:10 RBA Assistant Gov Lowe Speaks - -

*All rates shown are indicative of interbank rates and should only be used for indication purposes only. It is important to note that foreign exchange rates fluctuate and that rates may vary depending on the amount and the base currency that is purchased or sold. Rates are correct as of 8:00am UK time. CentralFX are not responsible for the rates shown.