Sterling firmer as May survives

Sterling is firmer this morning as Theresa May survives the vote of no confidence in her leadership of her party. The pound is trading at just under 90p against the euro, having been at almost 91p this time yesterday morning, and has recovered to about $1.2650 against the dollar having fallen below $1.25 at one stage yesterday. The single currency, meanwhile, is heading up towards $1.14 against the dollar, a level it has found difficult to convincingly breach on the upside over the past while

While May survived the leadership vote the central issue remains the same, namely can she get the Brexit deal through the UK parliament. If the vote against her yesterday – 117 out of 317 MPs – is an indication of the breath of opposition to the deal, then it’s very difficult to see how she can even if she gets some concessions from the EU. May will meet with her counterparts in Brussels today, though its not expected that they will off her anything concrete at this stage

There’s been a better tone to equity markets over the past couple of trading sessions and this is continuing this morning with European stocks in positive territory at the open. In line with this, bond yields in the core markets are edging higher with 10-year yields in the US back above 2.90% (just) and equivalent German yields heading up towards 0.30%

The annual rate of CPI inflation in the US dipped to 2.2% in November from 2.5% in December reflecting the impact of a fall in gasoline prices (in turn reflecting the recent decline in oil prices)

The ECB meets today and should confirm that bond purchases (QE) are to end this month – 3 years and 9 months after they commenced – though it is likely to revise down its forecasts for both growth and inflation. However, it will be its assessment of the risks to the outlook – are they still judged to the balanced, or are they to the downside – and its forward guidance on interest rates – will it indicate that rates may remain unchanged for longer than previously anticipated – that will be the focus for markets

Data due today includes jobless claims and import prices in the US