It has been a volatile FX session, with the Dollar temporarily spiking higher before giving back all of its gains and more. The GBP/USD cross temporarily dropped below 1.27 for the first time since early January before quickly rallying back to 1.276. Similarly, EUR/USD fell to near 1.114 but is back to where it was trading this morning around 1.117. There was however no such rebound in the AUD/USD which weakened to a year-to-date low of 0.688 following the release of the Reserve Bank of Australia’s policy meeting minutes. Their tone was dovish and RBA Governor Lowe said that the central bank would consider cutting rates 25bp at its June policy meeting – an event to which markets now attribute a 90% probability.
Sterling if anything is outperforming and in trade weighted terms is up 0.3% since yesterday, to a three-session high. British Prime Minister May is due to announce later today the outlines of a slightly modified Withdrawal Agreement Bill (WAB), following its approval earlier today by cabinet members. The WAB reportedly includes temporary customs-union membership until the next general election and concessions on UK workers’ rights, with the aim of winning parliamentary support from opposition Labour Party members. The question remains whether a majority of Members of Parliament are willing to endorse this version of the WAB in a fourth and likely last attempt.
