Markets overall were slightly more confident that a ‘no-deal situation would be avoided.

Oil prices continued to move sharply lower with fresh 15-month lows on over-supply concerns. The slide in energy prices undermined the Canadian dollar and Norwegian krone.

Dollar support was eroded by expectations that any Fed rate hike would be accompanied by a dovish policy statement and greater caution surrounding the 2019 outlook.

Hopes for an Italian budget resolution supported the Euro with structural support also a feature in tense markets.

Global equity markets remained generally on the defensive given global growth and debt concerns with US markets closing little changed as rallies attracted selling interest.

Following the latest Cabinet meeting, the government stated that there was the need to ramp-up no-deal preparations which maintained the nervous market tone, especially given fragile economic data releases. Sterling was also hampered by the fragile tone surrounding risk appetite and concerns over global growth, especially given a renewed slide in oil prices.

Late in the European session, there were reports of a shift in government tactics with Prime Minister May said to back holding a series of indicative votes on alternatives ahead of the main Brexit vote in January as parliamentary divisions continued.

Markets overall were slightly more confident that a ‘no-deal situation would be avoided which provided an element of Sterling support, although buying interest was subdued, especially as crude prices continued to move lower.

After a brief test of the 1.2700 area, GBP/USD dipped below 1.2650 while GBP/EUR settled just abpve 1.1100. There was little change on Wednesday with a marginal advance against the subdued dollar ahead of the UK inflation data.

Economic Calendar