Citi Wealth Insights

Cable’s initial drop to a 1.2983 low overnight are a result of fears that the European Council would only commit to agreeing to a Brexit extension until 22 May 2019 (ie. no further extension possible) and only if the UK House of Commons is able to pass the Withdrawal Agreement early next week.

The Fed FOMC proves more dovish than expected overnight.

Sterling remains well supported as markets continue to view the Brexit choice now as between a short (if PM May gets her deal through UK parliament) versus long extension to Article 50.

Overnight Brexit developments take yet another twist with press reports claiming there would be no deal between PM May and DUP this week, pushing back the Meaningful Vote 3 (MV3) possibly to next week (Monday – Wednesday) or perhaps even later.

After the rally in early 2019 driven by the onset of Fed dovishness and trade deal progress, investors are asking, “how much more will this rally continue?

While political noise continues to linger in the background, more recently there has been positive news in UK and Europe, which if sustained, could potentially see a significant improvement in the global risk backdrop.