Sterling falls as MP's return to Parliament from winter recess

GBP

Sterling fell on Tuesday as British lawmakers returned to Parliament to vote on Prime Minister Boris Johnson’s
European Union (EU) withdrawal deal.

After winning an 80-seat majority in last month’s election, it's likely Johnson’s Conservative Party will pass the
bill, analysts say, paving the way for Britain’s exit from the EU on 31st January. There are three days scheduled for
a debate before a vote on the bill on Thursday. It will then go to the House of Lords.

Expectations that Britain will finally leave the bloc this month has ended uncertainty about its position and lifted
sterling, but the currency is likely to come under pressure again when negotiations about Britain’s EU trade deal
begin.

USD

The safe-haven currencies pulled back from recent highs against the dollar on Tuesday as financial markets
stabilised, with investors turning more hopeful that tensions between the United States and Iran would not escalate
into an all-out war.

Better-than-expected US non-manufacturing sector and factory orders data also lifted the dollar.

The dollar got a boost after data showed the Institute for Supply Management’s non-manufacturing index at 55 in
December, up from 53.9 in November and slightly higher than market expectations.

US factory orders, however, fell 0.7% in November, though that was a little better than forecasts of a 0.8% drop.

Key Announcements

13.15 – USD: ADP Non-Farm Employment Change; Forecast at 160k against previous of 67k.