The cable rate traded a steady range for most of the day yesterday. If anything, it was biased mildly higher as risk sentiment improved and the dollar weakened through the early London session. On the Brexit front, Theresa May gave an update to the House of Commons on her recent trip to Brussels and where it leaves her proposed Brexit deal. She also said MPs would not vote on her Brexit deal until the week of 14 January. In response Jeremy Corbyn tabled a motion of no confidence in the PM, calling on MPs to declare “no confidence in the prime minister due to her failure to allow the House of Commons to have a meaningful vote straightaway". He stopped shy of declaring a motion of no confidence in the government, which could have brought about an early election.
The no confidence vote has been dismissed by Number 10, and so the pound has been largely unaffected. In fact, GBP/USD continued to push higher yesterday and the pair opens towards the top end of its recent range this morning, this before ministers meet to discuss and consider a no-deal Brexit plan. Meanwhile, the latest rumour is that ministers are receiving ‘secret legal advice’ on extending Article 50. If this were to happen, it reduces the chances of a no-deal, but means the uncertainty and associated impact on the economy could continue for longer.
Brexit remains front and centre for traders at the moment, but they will also have half an eye on tomorrow’s much anticipated US FOMC decision. UK inflation data is also due tomorrow, an important set of data, and perhaps a good distraction for traders from the ongoing Brexit saga.