The GBP/USD cross has powered through 1.30 for the first time since mid-November. Prime Minister Theresa May is still pushing to renegotiate with the EU some of the terms and conditions of the draft Brexit deal – in particular the Northern Irish backstop – in the hope that parliament would vote through an amended (and improved) deal. However, talk is getting louder of the government having run out of time and being forced to ask the EU to postpone its planned departure from the EU beyond 29th March.
Sterling price action indeed suggests that markets are growing more confident that the odds of the UK leaving the EU, let alone without a deal, are narrowing. Sterling has been helped on its way up by decent UK labour market data for November (released on Tuesday) and a speech yesterday by MPC member Broadbent in which he suggested that the Bank of England could gradually hike rates further.
