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Daily Brief

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Third time lucky?

Speaker says no

As anticipated, the speaker of the House of Commons declined to allow the government a second crack at Saturday's Brexit deal vote because it would be "repetitive and disorderly". Instead, the House will vote today on the second reading of the Withdrawal Agreement Bill (WAB). That prospect sustained investors' enthusiasm for sterling.

The prime minister will try to pass the WAB into law in three days, an ambitious target given that treaties normally receive 21 days' examination.  At today's debate MPs will be asked to give the WAB a second reading. It is likely they will do so. That is not to say they will give it a clear run during the next stage: there is talk of amendments, such as a confirmatory referendum and a customs union with the EU.

But that is tomorrow. Investors are content for the moment that the Brexit deal has a chance of getting through, if not in the next three days then in the next three months. They are also fairly confident that no-deal has been kicked into the long grass, which helped take the pound higher again on Monday. Its 0.4% gain put it in first place for the day alongside the NZ dollar and reduced its post-referendum loss to an average of 6.4%.

Risk on

There were more positive noises from Washington regarding the Sino-US trade relationship. Together with Brexit deal optimism and with a complete absence of unhelpful economic data, the effect was to reduce appetite for the safe-havens and push up the commodity dollars.

The US president's chief economic advisor Larry Kudlow, told an interviewer that trade negotiations with China are "looking pretty good" and that "there is a chance we can get those December tariffs off". The two sides hope to have an agreement ready to sign by the time Trump and Xi attend the APEC meeting next month.

For no obvious reason, the NZ dollar made most of the reduced tension, keeping pace with the pound and adding 0.4% against the Aussie. The Canadian dollar sat between the pair, losing a third of a cent to sterling. At least initially it was unaffected by the prospect of a minority Trudeau government, following yesterday's general election.

Plenty of Brexit

The prime minister is aiming for two votes today; one to take the WAB a step further ahead and the other to approve the record-breaking three-day timetable for its passage through Parliament. There are UK data this morning for public sector borrowing and industrial orders (the CBI measure).

The only data from Europe come in the form of the European Central Bank's Bank Lending Survey. Canadian retail sales and the Bank of Canada's Business Outlook Survey appear after lunch, together with US existing home sales and the Richmond Fed's manufacturing index. The New Zealand trade figures come out tonight.

But never mind any of that. All of the interest will be in the House of Commons debates and votes.  

GBP: Still the market's favourite

GBP: Still the market's favourite

USD: Positive noises about trade

USD: Positive noises about trade

NZD: Supported by trade possibilities

NZD: Supported by trade possibilities

JPY: Safe-havens not in demand

JPY: Safe-havens not in demand

CAD: So far unaffected by election result

CAD: So far unaffected by election result

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