The pound got off to a good start yesterday morning as London traders reacted to the news that the EU had agreed to May’s Brexit proposal. Global risk sentiment was generally positive too, supported in part by news that Italy was showing signs of making progress on its budget discussions with the EC, or at least becoming more conciliatory in its tone. European stocks made solid gains and Cable crept higher through the London morning and early New York session to trade to a high of 1.2860.
But that’s about all it could manage, before the pair ran into a wall of offers. It seems investors are very reluctant to bid the pound too high in advance of the vote in the House of Commons on 11th December (there were some reports yesterday that this would be on the 12th).
GBP/USD has lost even more ground early this morning, and has since fallen under the 1.28 figure. Trump saying that the deal “was great for the EU” hasn’t helped, and with a lack of any positive Brexit headlines since the EU Summit and growing doubts that Parliament will reject the deal, traders are obviously a little jittery. This may change, as we’re used to, and while Brexit headlines continue to drive direction, economic data is likely to be shrugged off in the meantime, at least in the run up to the Commons vote.