Good morning,

GBP: May turns to business leaders for backing

The pound lurched into life yesterday afternoon as the UK and EU agreed on the draft Brexit declaration. This means that Theresa May will be travelling to Brussels this weekend to seek approval from the leaders of the EU member states and requires a strong majority (20 out of 27 states) to pass the deal. These headline driven moves are becoming more familiar, and perhaps less exciting, to those in the currency markets. It wasn’t long until the rallies were sold off and the enthusiasm dried up.

Spain’s concerns over Gibraltar will impact their decision-making process and, crucially, there is still a distinct lack of support from politicians back in the UK. The threat of a new leadership challenge remains and the House of Commons vote will continue to weigh in on any rallies. There will be added pressure on Sunday evening as the market opens with thin liquidity.

EUR: Data-driven Friday

We have November’s Eurozone manufacturing and services PMI at 10:00GMT. October’s surprise downside reading adds pressure to the already wavering consumer confidence.

ECB minutes from October were uneventful, with no specific guidance on inflation or growth. Officials have expressed some uncertainties and fragilities across the Eurozone, which means that the December 13th minutes will be pivotal for forecasting dovish action and QE tightening.

The Italian budget stand-off looks to intensify as Italy affirm they will not change the pillars of their 2019 budget. They have stated that they cannot betray the Italian citizens who voted for their anti-establishment framework.

Have a great weekend.