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Pound holds firm after Government’s Brexit motion is approved

By Alex Edwards

The pound has held firm over the last 24 hours, although it opens slightly below the 10-month high vs. the dollar in London this morning. From a technical perspective there’s quite a lot of resistance close to and above 1.3350 and so any break could make for a quick move towards and above the 1.34 big figure.

Meanwhile the Government’s Brexit motion was approved yesterday with the Letwin-Cooper Amendments ensuring that May must offer a vote on a no-deal should her plan not be passed.

Whilst Brexit headlines will continue to dominate direction in GBP/USD, traders will also be looking to US Advance GDP due for release this afternoon.

The greenback rose from a three-week low on Wednesday, as investors grew cautious about the continuing U.S. trade talks with China. US Trade Representative Robert Lighthizer said yesterday that much still needs to be done to reach an agreement with China. In other data related news, we saw a 4.6% monthly advance in Pending Home Sales, offsetting the poor housing figures released on Tuesday. Factory Orders, however, posted a modest 0.1% advance versus the 0.5% expected.

Investors also shunned risk after the US-North Korea summit ended abruptly without any agreement.

Looking ahead today and all eyes will be on the release of US preliminary Q4 GDP which is expected to print a 2.3% quarterly growth from a Q3 reading of 3.4%.

EUR/USD has traded a steady range over the last day or so. Markets are now looking to German Prelim CPI, which is released throughout the day today.

Risk sentiment shifted again overnight with equity markets softening modestly and the greenback and US bonds moving higher. Within this context, the Aussie has drifted lower and opens in London at .7140.

The Canadian dollar gained ground against the dollar yesterday early in the North American session. However, the pair saw a bounce after data released by The Bank of Canada showed the Consumer Price Index recorded a modest rise of 0.1% in January with the yearly rate and Bank of Canada’s core CPI decelerating sharply to 1.4% y/y and 1.5% y/y respectively.

On the data front, today sees Current Account figures released by Statistics Canada. The global trade war and lower oil prices continue to weigh on Canadian exports and the Canadian dollar.

The New Zealand dollar fell through trade on Wednesday having failed to break through resistance at 0.69. In fact, the NZD was one of the day’s worst performers, losing 60 points against the USD and touching intraday lows at 0.6836. With little of note driving direction, the Kiwi appears to have fallen victim to a correction in equity markets amid uncertainty surrounding US-China trade talks.