Good morning,

GBP: Two month high for sterling

Sterling drove to its highest level since mid-November against the USD and EUR yesterday as traders increasingly priced in a delay to the end of the Article 50 process and a postponement to the UK leaving the European Union on March 29th.

Of course, none of this is certain and we must wait on Tuesday’s round of House of Commons votes to see if postponement will become government policy. The news that the Labour party will back the amendment was the main driver of the positivity in sterling.

Sterling may find it difficult to push much higher from here as it bumps up against resistance levels from previous attempts to move higher. If I was a betting man I would expect GBPUSD to be anchored around the 1.3060 mark for the rest of the week, dollar news flow depending.

Before the votes are counted we will be running through the options and expectations of these votes, the impact on sterling and where we go next in our next Brexit webinar next Tuesday afternoon at 2pm. Attendance is free and the presentation will be recorded for those unable to make the 2pm start time.

EUR: ECB may lean on the euro

The European Central Bank meeting today has the ability to upset the single currency, although we cannot see there being too much news from Mario Draghi’s press conference in Frankfurt. The ECB will likely attempt to blame recent weakness in local data – French and German industrial production numbers for example – on external factors like the trade concerns between China and the United States.

On balance we think that the overall tone of the meeting may be enough to keep the euro on the back foot. The decision is due at 12.45 GMT with a press conference at 13.30.

USD: Jobless claims more important than shutdown

The US government remains shut down and the pettiness between the two sides is only increasing. The Speaker of the House, Nancy Pelosi, will not let President Donald Trump deliver his State of the Union address as planned on January 29th in her chamber unless government agencies have been reopened.

The impact on the wider economics of the US economy is not harsh enough to meaningfully move the US dollar yet and should today’s initial jobless claims show growth then investors will choose to focus on them instead. Jobless claims are due at 13.30 GMT.

Have a great day.