Sterling heads south

Sterling weakened notably yesterday after Theresa May decided to postpone the vote on the Brexit deal scheduled for parliament today, falling to over 90p against the euro, its lowest level since early September, and to under $1.26 against the dollar, its lowest level since April 2017. As the Irish Times puts it, PM May decided to accept the lesser of two humiliations, the ignominy of running away from the vote (for now anyway perhaps) compared to the greater ignominy of suffering what she herself effectively admitted was going to be a significant defeat

Prime Minister May has said  she will go to Brussels to seek greater clarification on the backstop in particular, which the EU has said it is willing to provide if it helps the ratification process in the UK parliament while at the same time insisting it will not renegotiate the withdrawal agreement. This may not be enough though, with the DUP for example saying it wants rid of the backstop altogether. All of which just adds more uncertainty on top of already heightened uncertainty

The S&P 500 (index of shares) in the US fell to within a whisker of its 2018 low – set in early February – yesterday before bouncing strongly to end slightly ahead overall. Bond yields in the core markets edged higher, with the exception of UK yields which fell on the day on the back of Brexit-related developments

GDP growth in the UK eased in the three months to October, coming in at 0.4% compared to 0.6% in the three months to September. Presumably increasing Brexit uncertainty will weigh on activity

Data due today includes the latest labour market report in the UK and producer prices in the US