Sterling had a volatile session yesterday after Theresa May faced another challenge to her leadership and a backlash from pro-EU rebels trying to overturn Custom Bill amendments forced through by Brexiteers. May faces a damaging defeat in the Commons after Labour confirmed it would back an amendment tabled by rebel Tory MPs seeking to ensure Britain remains in a customs union after Brexit.
The Prime Ministers Brexit plans could be thrown into further disarray with two more pro-EU government ministers understood to be considering quitting their roles in order to back the move on Tuesday. Tory remainers Nicky Morgan and Stephen Hammond have tabled an amendment to the trade bill under which Britain would be forced to join a customs union with the EU if no agreement were reached on frictionless trade by 21 January 2019.
The UK is due to leave the EU on 29 March 2019 but has yet to agree how its final relationship with the bloc will work. The government, which does not have a Commons majority, has been under pressure from MPs on both sides of the Brexit debate causing volatility in the markets.
In non-Brexit related news figures revealed British workers’ wages have risen at the slowest rate in six months despite a record number of people in jobs, challenging the Bank of England as it considers raising interest rates next month for only the second time since the financial crisis.
In written testimony delivered to the Senate Banking Committee on Tuesday, U.S. Federal Reserve Chairman Jerome Powell, said the economy is on the cusp of “several years” where the job market remains strong and inflation stays around the Fed’s 2 percent target.
The Fed chair signalled not just that he believes the economy is doing well, discounting the risk that a trade war may throw a global recovery off track, but that an era of stable growth may continue provided the Fed gets its policy decisions right.
09:30 - GBP: Consumer Pricing Index is expected to increase to 2.6%
13:30 - USD: Building Permits
15:00 - USD: Fed Chair Powell Testifies