GBP/USD pushed higher through the afternoon session on Friday, largely a result of a sell-off in the dollar, this despite news breaking that a deal had been reached to temporarily end the US government shutdown. It’s been difficult to pin-point a precise reason for the move, but risk sentiment improved, evidenced by a late rally in equities.
Positive Brexit sentiment also played a part i.e. markets are increasingly pricing in less of a chance of a no-deal. The Sun newspaper reports that the PM has told her cabinet privately that she has ruled out a no-deal Brexit, which is seemingly lending further support to the quid this morning. That said, we saw a bit of a blip in the Asia session, partly in reaction to a weekend headline that Ireland would not be accepting of any changes to the agreement on the backstop.
All eyes on Brexit – that goes without saying – but traders will also have half an eye on a speech (or Q&A) by BoE Governor Carney today, although it could well be Brexit themed, as well as a host of US risk events by way of the FOMC Statement and press conference on Wednesday and Non-Farm Payrolls on Friday. Moreover, we get the Parliamentary vote on PM May’s deal on Tuesday as well as amendment votes. Investors are paying attention to the ‘Cooper amendment’ which would force the Government to ask the EU for an extension if a deal cannot be agreed on by the 29th March deadline.