Sterling edges higher despite calls for Tory leadership challenge
The Pound ended higher for the second session in a row on Monday as Theresa May scrambled to achieve enough support within government for her draft Brexit deal.
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fter the furore surrounding the chaotic scenes of last Thursday, Eurosceptic Tory MP’s led by Jacob Rees-Mogg have, as yet, not gathered enough signatures to force through a leadership challenge against May. It was reported that a total of 26 Conservative Party members out of the 48 required to trigger a no confidence vote have been submitted. According to the Times, a number of ‘firm pledges’ from other senior Brexiters means that this number could, however, be met later this week. This would be a significant piece of bad news for Sterling and could well send the currency below last week’s lows.

Brexit headlines will continue to dominate trading today and overshadow all else as far as the Pound is concerned, including a speech from Bank of England Governor Carney this morning. As we mentioned last week, further losses for Sterling remain on the cards as long as the possibility of a ‘no deal’ Brexit remains live.

Thin Thanksgiving trading exacerbates US Dollar moves



The US Dollar started the Thanksgiving week on the back foot, falling relatively sharply against the Euro to its lowest level in two weeks. Some cautious comments from Federal Reserve members and mixed US economic data in the past few days were behind the sell-off, possibly exaggerated by thinner than usual trading. Fed members Clarida and Kaplan have both suggested that the rate hike cycle in the US is on its last legs, while citing the downside risk from a potential global slowdown. This has raised concerns among US Dollar bulls that the Fed may hike at a slightly slower pace next year than many had anticipated.

Data out of the US is light on the ground this week. Markets will be closed on Thursday due to Thanksgiving and trading will likely be thin throughout the week.

Euro touches two week high, investors eye PMIs



Recent economic news suggesting that the Eurozone economy may be slowing has not derailed the Euro so far this week, which rose to its highest level since 7th November this morning. Gains were tempered, however, by a sell-off in equity markets that caused investors to flee riskier assets and buy the safe-havens.

As far as data is concerned, Friday’s preliminary PMIs for November could be a major test for the common currency. In the meantime, Thursday’s ECB meeting accounts could give a good indication as to whether policymakers believe the recent slowdown will be sustained or merely prove temporary.
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