May Pleads For Extension

GBP

The pound reversed earlier gains on Tuesday after concerns that Prime Minister Theresa May’s request for postponing Brexit was running into complications with the European Union. May is asking the EU to delay Brexit by at least three months after her plans for another vote on her twice-defeated divorce deal were thrown into crisis.

Markets are convinced an extension will be granted, but media reports that some EU officials are reluctant to grant an extension simply to gain time weighed on the British currency.

Sterling held near the day’s highs earlier on Tuesday after data showed that British employers increased their hiring at the fastest pace in three years - helping to push the unemployment rate to its lowest since the start of 1975.

USD

The U.S. dollar slipped against a majority of currencies on Tuesday, as concerns over the U.S. economy and expectations that the Federal Reserve will prove accommodative at a meeting this week weighed on the greenback.

Traders are focused on the Federal Reserve, which kicked off its two-day policy meeting on Tuesday, for clues about the likely path of U.S. borrowing costs and whether the central bank will affirm its commitment to “patient” monetary policy, analysts said.

On Tuesday, data showed new orders for U.S.-made goods rose less than expected in January and shipments fell for a fourth straight month, offering more evidence of a slowdown in manufacturing activity.

Key Announcements

09.30 - GBP: CPI YoY; Forecast the same as previous at 1.8%
18.00 – USD: FOMC Economic Projections
18.00 – USD: FOMC Statement
18.00 – USD: Federal Funds Rate; Not expected to change from 2.5%
18.30 – USD: FOMC Press Conference