United States Dollar:
Tonight sees the House of Commons vote on whether to pass the proposed Brexit bill into law thereby giving government the power to trigger Article 50 and lead the UK out of the EU. The first two days of debate have seen several proposed amendments being dismissed as the Torys avoided a large scale rebellion of its MPs. Tonight’s vote at 8pm (if passed) will see the bill be passed to the Lords for debate before being enacted into law. Sterling went on a rollercoaster ride throughout yesterday with GBP/USD dropping like a stone at the start of the European session before rebounding in the afternoon as some hawkish comments from the MPC’s Kristin Forbes suggested that a 2017 interest rate hike is still a possibility. At a speech in Leeds she re-affirmed the point made last week in the Banks Inflation Report that post-referendum economic data has been remarkably solid with no real noticeable shock being experienced by the UK after the vote to leave. Last week at the presentation of the Inflation Report Governor Mark Carney (possibly through gritted teeth) was forced to concede the banks prediction of a sharp slowdown in the UK economy post-referendum was wide of the mark however he showed no indication that a rise in rates was on the cards anytime soon sending sterling lower. Things could change as we head into 2017 however should inflation continue to rise above estimates and the economy continue to perform well. In the absence of any economic data (which has been taking a back seat recently anyway) all eyes today will be focused on Westminster to see if MPs manage to amend the Brexit bill. GBP/USD swung from 1.2480 to as low as 1.2345 before the Forbes driven rebound yesterday afternoon. We currently sit at 1.2510.
We expect a range today in the GBP/USD1.2430 – 1.26
Marine Le Pens National Front party have edged into the lead in the latest polls in the run-up to the first round of the French general election. In the latest survey conducted by IFOP she was seen having 25% of the vote ahead of main rivals Emmanuel Macron’s 20.5% and Francois Fillon’s 18.5%. As unlikely as it is given the two round nature of elections in France another black swan event, akin to Brexit, could be on the cards should Le Pen prevail. As mentioned it is very unlikely however should she curry more favour with disillusioned voters and somehow take victory in May, then the very existence of the euro would come into question given her insistence of the introducing a new shadow currency ahead of possible issuance of a new Franc. EUR/USD has fallen during the Asian session failing to reclaim 1.07 with it currently at 1.0640 as the dollar regains some traction after slipping throughout January. Political uncertainty in Europe is assisting the move however gains may be limited in the short-term unless we (finally) get some details on the proposed infrastructure spend by Donald Trump. GBP/EUR is higher at 1.1735.
We expect a range today in the GBP/EUR rate of 1.1680 – 1.1810
Aussie and Kiwi Dollars:
Tonight sees the RBNZ likely to leave rates on hold at 1.75% at its monetary policy statement. The Kiwi benefitted from a slightly better than expected Global Dairy Trade Index print overnight with 1.3% growth shown. The next event for the Aussie is tonight’s speech by RBA Governor Philip Lowe at the Australian Economic Forum Dinner in Sydney. GBP/AUD is at 1.6365 and GBP/NZD is at 1.7115.
We expect a range today in the GBP/AUD rate of 1.6310 – 1.6475
We expect a range today in the GBP/NZD rate of 1.7060 – 1.7205
AUD: RBA Gov Lowe speaks
EUR: No data
GBP: No data
NZD: RBNZ Official Cash Rate; RBNZ Press Conference
USD: Crude Oil Inventories
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