Good morning,

GBP: Lives on to fight another day

Despite the incredibly unstable trading conditions, the pound has found its footing for now. For those who tuned in yesterday evening to watch Theresa May’s speech, the opening sentence sounded like the beginning of her resignation as she reminded us civvies just how brutal national politics can be.

Theresa May has re-confirmed that she has every intention to push on with the current Brexit plan, with or without the support of her fellow peers. Those contesting her, for example, Jacob Rees-Mogg, have yet to provide any other solution, so whilst the chaos presents a platform for them to challenge, unless they have a tangible plan, the UK remains in the same state of flux.

All eyes today will remain firmly on any new resignations and the headlines. Through the Daily Telegraph, the DUP are applying pressure by stating that their relationship with the Conservatives is over unless Theresa May steps down.

GBPEUR has suffered its biggest loss in over a year, dropping 2.6% from 1.1550 to 1.1248 in the space of two days. With all the current whispers and rumours, trying to translate the current state of play is impossible. Analysts at Jeffries echoed this sentiment, issuing a statement to their clients that the pound is simply “untradeable”.

USD: Fed to review 2019 policy

Whilst the Bank’s mandates have not changed, they have issued a marginal warning in raising rates whilst global growth remains slow. In the short term, this is unlikely to impact the USD but it applies pressure to the 2019 interest rate forecasts.

They plan to sponsor a research conference in early June 2019, designed to maximise their outreach effort and bring in a wide range of stakeholders to speak to the markets.

With the labour market near full employment and inflation nearing the 2% target, now is the time to “take stock of how we formulate, conduct and communicate monetary policy” – Fed Reserve Chairman Jerome H. Powell.

US manufacturing data is due out at 14:15 GMT.

EUR: Italy’s defiance

The European Commission vice president has reminded Italy that they are openly defying the EU’s budget rules. Whilst Brexit has dominated the news, this must not be overlooked as 21st November is the date for the official EU response.

Mario Draghi is speaking in Frankfurt this morning. The banking congress is focused on getting “Back to normal – What does it mean?”. There may be some targeted questions to deviate him away and onto the ECB’s monetary policy, but we wouldn’t expect to hear anything new.

Euro inflation for October is due out at 10:00GMT.

Have a great day.