GBP/JPY

With BOJ monetary policy diverging from that of the Fed and the BOE, USD/JPY and GBP/JPY have been on a tear lately.

UK inflation data kicks of the top tier economic data at 07:00 where an above-forecast print simply piles on more pressure for the BOE to raise rates.

A few words from Jerome Powell yesterday was all equity bulls needed to get a spring back in their step. But can they maintain that stride through today’s inflation data?

The risk-off tone of last week showed no signs of abating during Asian trade with money flowing into safe haven currencies JPY and CHF.

The RBA have taken the Omicron variant in their stride and seem optimistic over their economic outlook. Just don’t expect them t get hawkish any time soon.

The Swiss Franc and the Japanese Yen are considered safe haven currencies

The British pound was the weakest major currency yesterday on the back of reports that there was no agreement on a customs union between Labour and Conservatives. It fell further this morning in reaction to the latest consumer inflation data.

So, the UK parliament couldn’t find a consensus on Brexit last night after MPs voted on eight different options and – lo and behold – there was majority for absolutely none of them.

Rumours are circulating that 3 Conservative lawmakers are to follow the 7 Labour MPs and defect to the Independent Group later today.

As my colleague Fawad Razaqzada noted earlier this morning, markets were relatively dull heading into the day’s marquee event, the release of UK PM Theresa May’s “Plan B” Brexit bill. Unfortunately, the “new” proposal did little to shake things up.

If the government loses the no confidence vote then an early general election will be called. But rebel Tory MPs and the DUP are both expected to come back on side and back the government, meaning Theresa May is likely to survive.

Next week’s major market risk event is most likely to be the UK parliament’s so-called “meaningful vote” on the withdrawal agreement Prime Minister Theresa May negotiated with the European Union at the back end of last year.

A week from today we will finally have the “meaningful vote,” when UK’s parliament will decide whether to approve the Brexit deal which Prime Minister Theresa May negotiated with the European Union at the back end of last year.

The pound initially fell on the back of the inevitable news that the UK Prime Minster was facing a vote of confidence this evening. However, Sterling then rebounded as several ministers came out and voiced their support for Theresa May.

The handling of the whole Brexit process by the UK government has frankly been a total disaster, to put it nicely. Today saw several more ministers resign, this time over the Draft Withdrawal Agreement from the EU which was secured last night.