Sterling rebounds from early losses
Sterling briefly fell to over 90p against the euro after the EU’s Brexit Chief Negotiator, Michel Barnier, said the withdrawal talks are deadlocked on the question of the UK’s financial settlement (aka the ‘divorce bill’). However, it subsequently staged an impressive comeback and is trading at around 89p this morning
Because of the deadlock in the negotiations, Barnier said sufficient progress has not been made to proceed to discussing a new trading relationship between the EU and the UK, though he hopes such progress might be made over the next couple of months
The euro continues to trade at around $1.18 to the dollar, while bond yields in the core markets edged lower yesterday
Mario Draghi says the ECB’s forward guidance on interest rates is very important, particularly that part which says that rates will remain at their present level until ‘well past’ the end of QE. Bloomberg is reporting this morning that the ECB is considering extending QE to September 2018 but cutting the pace of its monthly purchases by half (to 30bn euro) starting in January
The British Chambers of Commerce (BCC) cautions against an ‘earlier than required’ interest rate hike in the UK, given soft economic conditions and continued uncertainty over Brexit
Data due today include US CPI, retail sales and consumer confidence