The government published details of the Brexit legal advice with a particular focus on the ability to exit from any backstop arrangement

The government published details of the Brexit legal advice with a particular focus on the ability to exit from any backstop arrangement

There was a significant decline in US bond yields on a dip in inflation expectations with 10-year benchmarks at 10-week lows near 2.95%.

Lower yields undermined the dollar, especially with expectations of a less hawkish Fed policy while political fears continued to undermine Sterling.

Global equity markets held gains on Monday, although with little evidence of follow-through buying as underlying caution prevailed and there were losses in Asia on Tuesday.

Oil prices made net gains as risk appetite improved and the US currency lost ground while a weaker dollar also underpinned precious metals.

Cryptocurrencies moved notably lower before finding support as the dollar retreated.

GBP/USD briefly moved above 1.2800 against the dollar on Monday, but quickly lost traction and retreated steadily. The UK November PMI manufacturing index strengthened to a 2-month high of 53.1 from 51.1 and above consensus forecasts. Overall output and new orders strengthened slightly, although export orders declined for the second successive month.

GBP/EUR moved below the 1.1200 level while GBP/USD dipped to 5-week lows near 1.2700.
The government published details of the Brexit legal advice with a particular focus on the ability to exit from any backstop arrangement. There were still major doubts whether the government would be able to encourage potential rebels to back the government with underlying expectations of defeat and major uncertainty continued to undermine Sterling support.

BRC and Visa retail spending data indicated weakness for November with fragile confidence, maintaining doubts surrounding the outlook and Sterling remained on the defensive with EUR/GBP near 0.8940 ahead of the Brexit parliamentary debate as GBP/USD failed to make headway.

Economic Calendar

Expected Previous
08:15 CHF Swiss CPI (Y/Y) 1.10% 1.10%
09:15 GBP BoE Gov Carney Speaks - -
09:30 GBP UK PMI Construction 52 53.2
15:00 USD FOMC member John C. Williams speech - -

*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.