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Cable holds firm in face of Bercow’s ruling on 3rd vote

By Alex Edwards

GBP/USD dipped below 1.32 yesterday after the Speaker of the House of Commons, John Bercow, ruled out another vote on Theresa May’s deal unless MPs are provided with a new motion, citing a convention dating back to 1604. It doesn’t leave much time and with only 11 days to go until the UK officially leaves the UK, albeit the date is likely to be extended if no deal can be reached before then, some ministers are warning of a “constitutional crisis”.

Even if the government do end up ramming a third vote through, it won’t make too much sense until they’re able to reach some agreement with the DUP. According to some reports, these talks with the DUP are stalling. And yet, GBP/USD has recovered overnight because in many respects not much has changed; either a deal still may be voted through before the end of March or the deadline is extended.

Other than Brexit headlines, traders will be keeping an eye on average earnings and employment data today.

It’s been a quiet start to the week for the greenback. US stocks and oil were both up yesterday. Traders will now be focusing their attentions on the upcoming Fed interest rate announcement, as well as Brexit related events. There’s no other US economic data due today.

The euro kicked off Monday on the front foot slicing through the 50-day EMA (Exponential Moving average), an indicator that measures trend direction over a period, and touched a high of 1.1359 vs the dollar. But the rally was short-lived and pulled back to 1.1324 in the North America session.

EUR/USD is back up again this morning, although it still hasn’t managed to push through yesterday’s highs. A expectation-beating German ZEW print today may be al that’s required for the pair to break this recent high.

The Australian dollar edged higher through trade on Monday, creeping back above 0.71 US cents in what was otherwise a relatively quiet start to the week. With little data released, the AUD rallied to touch two week and intraday highs at 0.7119 as equities continued to drive increased risk demand and a jump in iron ore prices underpinned AUD/USD bids. In its minutes overnight, the RBA noted “significant uncertainties” on the economic outlook, but it didn’t come as much of a surprise and the AUD/USD pair remained unmoved.

The AUD has struggled to break outside ranges of late, hamstrung by a sustained softness in domestic economic indicators and heightened expectations the RBA will be forced to cut rates at least once through the second half of the year.

The Canadian dollar enjoyed a largely slow start to the week, trading a 50-point range as a spike in crude oil prices and a consolidation of USD holdings prevented investors from extending moves beyond resistance handles.

As well as the Fed rate announcement, focus for traders now shift towards Canadian inflation data due on Friday. With the BoC recent dovish turn still fresh in the mind of many, a soft read could compound expectations for a sustained period of accommodative monetary policy, weighing on the CAD moving into H2 2019.

The New Zealand dollar edged higher during the domestic session yesterday in what was a quiet start to the week. Opening at 0.6848, the kiwi moved higher to an intraday high of 0.6875 on broader US dollar weakness, trading in a thirty-pip range overnight.