Brexit continued to dominate Sterling sentiment last week and looks set to continue its run in the headlines. The Pound see-sawed for much of last week, first being slashed to below 1.27 before rebounding to 1.3 thereafter after a crushing, parliamentary defeat on Theresa Mays deal. Ultimately however, the Great British Pound settled on Friday to open this morning at 1.2857, still around 100 pips higher than last Monday.
Although all Brexit related content is speculation at the moment, the media have identified a Norway type divorce as a 50% chance of occurring, which would also be the most welcome scenario for British Business’ and the Sterling. Beyond speculation however, the market is watching and waiting for any new Brexit headlines.
The domestic calendar also held a few gremlins unfortunately for the Pound with UK inflation decelerating in line with market expectations to 2.1% y/y in December while retail sales and core sales fell -0.9% and -1.3% m/m. Ultimately, the Pound found little support from the data.
Moving into the start of a new week, the Sterling again looks to the headlines for any new Brexit headlines as well as Chinese GDP data for direction.