The U.S. currency rose overnight after Trump sought a "historic" increase in military spending by $54bn (an increase of 9 per cent), whetting dollar bulls' appetite before the president's speech to Congress. The President will let the Department of Defence how to spend the extra funding, which will be paid for by sharp cuts in other government departments. Once his budget is finalised will be sent to Congress in mid-March for approval, which many think will set off a huge battle in Washington.
Mr Trump, also said he is planning to act quickly to bring reforms to the country, with the increase in military spending being the start. However the greenback has sagged lately with the Trump administration yet to hammer out clear specifics, notably on tax reform, and focus has naturally turned to the president's first major address to Congress later on today.
Sterling hit a 12-day low against the dollar on Monday, as talk of another possible Scottish independence vote added to fears about Britain's future as it prepares to leave the European Union. A report in from a leading UK newspaper said British Prime Minister Theresa May is preparing for Scotland to call a fresh independence referendum in March, to coincide with the triggering of Article 50 -- Britain's formal notification to leave the EU, with a separate report in another reputed media outlet reporting that May is planning to curb freedom of movement for EU citizens as soon as she triggers Article 50.
A spokesperson for the prime minister said the threat of a fresh Scottish independence vote was creating unnecessary uncertainty and division, and that the prime minister has not yet set a timetable for her migration policies, which gave the pound some relief.
Nevertheless, a survey on Monday showed optimism among businesses in Britain's services sector is now higher than at any time since June's vote to leave the European Union, despite the prospect of rising costs and prices eroding profits.
13.30 – USD – Preliminary GDP QoQ; Forecast at 2.1% against previous of 1.9%
15.00 – USD – CB Consumer Confidence; Forecast 111.3 against previous of 111.8