Underlying political tensions unsettled Sterling on Monday with some reports that Conservative Party MPs were looking to hold an indicative vote of no confidence in Prime Minster May.
Oil prices pushed sharply higher to fresh 5-month highs on Monday with further concerns over potential disruption to Libyan supplies with Brent trading close to $71.0 p/b.
Gains in oil prices boosted demand for commodity currencies, although unease over US trade policies maintained an element of caution.
With doubts over Fed policies, the US dollar drifted lower as EUR/USD gained some support from short covering.
Although there was no evidence of a political breakthrough, Sterling was protected by higher oil prices.
Precious metals also secured limited net gains from a weaker US dollar. Equities were held in narrow ranges with a solid tone, but a slight retreat from 6-month highs.
Underlying political tensions unsettled Sterling on Monday with some reports that Conservative Party MPs were looking to hold an indicative vote of no confidence in prime Minster May. Brexit concerns were offset to some extent by further gains in oil prices and a firm tone in commodities GBP/USD registered a net advance given the weaker dollar, but it was capped below 1.3100 while GBP/EUR held around 1.1630 before fading towards the European close.
The House of Lords approved legislation designed to block a ‘no-deal’ outcome and it should come into law on Tuesday while technical talks between the government and Labour Party continued. On Tuesday, Prime Minister May will visit Germany and France ahead of Wednesday’s EU Summit to clarify UK intentions.
Economic data recorded a weak BRC retail sales release for March, although this was distorted by seasonal factors and Barclaycard data recorded a stronger release for consumer spending. Sterling edged stronger with net support from the strength in oil prices with markets braced for choppy trading amid intense political activity.
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