Sterling remains at elevated levels as it continues to run off the high that is Brexit progress. Last night’s amendments saw May’s promises to host votes on a no-deal scenario and an extension in Article 50, should her second meaningful vote attempt fail, become legally binding. Meanwhile, Jeremy Corbyn announced Labour’s official stance to back a referendum should the meaningful vote fail. This is merely an extension of Labour’s stance to remain in a customs union. March looks set to be a pivotal month for sterling with a lot of progress yet to be made, but for now, sterling remains set on a positive path.


The euro hit its strongest point against the US dollar in three weeks yesterday, as it heads closer again to the upper half of the trading range it resided in since the middle of October. Despite this,  Money Supply data shows liquidity flows to the private sector are slowing down, which signals Gross Domestic Product growth is also shifting into a lower gear. This monetary indicator suggests the European Central Bank may indeed introduce new Targeted Long Term Refinancing Operations to keep liquidity flowing through the banking system, or at least extend its current TLTRO program. This would mean “looser for longer” for the ECB’s Monetary policy, which implies a weaker euro for months to come. All throughout the morning, the German Bundesländer release their Flash Consumer Price Index, just as Italy at 10:00 GMT. The French reading already missed the mark by a wide margin this morning, staying flat in February, while the Spanish print was exactly on target at 1.1% year-on-year.


The greenback had a mixed day yesterday, with early losses against some European major currencies balanced out with gains against Asian ones. The main driver of the positive moves could have been unexpectedly triggered by Federal Reserve Jerome Powell in his second round of testimonies to the US Congress. This time, Powell hinted that the Fed may be closer to set the schedule for ending the balance sheet reduction this year, to be probably announced in next month´s meeting. Although this signal can be read as a further dovish move of the FED, the market reaction suggests a softer stance is no longer a surprise, with bulls pushing higher for the dollar. However, some of this upside moves might have come after the U.S. Trade Representative Robert Lighthizer cooled down expectations on the US-China trade deal, claiming that structural changes are still expected from the Chinese side for a deal to be put in place. Today, markets will be closely watching the highly expected release of the Q4 GDP and inflation data at 13:30 GMT, which bear the potential of sharp market moves should they fail to meet expectations.


Despite a minor miss in inflation data, the loonie still managed to advance bravely against most G10 currencies as oil prices returned to the levels it reached prior to Trump’s OPEC tweet. The January Consumer Price Index came in at 0.1%, putting the Common year-on-year CPI reading at 1.9%. The implied probabilities of interest rate increases for the coming year, however, remained unchanged, which implies one Bank of Canada rate hike in the second half of the year remains the base case for now. Today sees the Current Account and the Raw Material Price Index at 13:30 GMT as main data releases.