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Voting for more uncertainty

A bit of a rethink

To describe today's Commons votes as crucial for Britain would be an exaggeration: there have been a dozen or more of these supposedly pivotal moments over the last couple of years and nothing has happened. But today is potentially serious for sterling, and not necessarily for the best.

It is not simply that investors cannot anticipate which way members of parliament will vote this evening: they do not even know what motions they will be voting on. They can guess that one will involve dumping the Irish border "backstop" and that another will give parliament the power to delay Article 50, and therefore Britain's departure from the EU. But until Mr Speaker reveals his list of approved amendments it is all guesswork.

Largely for this reason, sterling had a bit of a setback on Monday. There were no UK economic statistics to get in its way and Bank of England governor Mark Carney offered nothing new during his appearance at a seminar. Investors decided they were not as sure as they had been that it would go sterling's way. Gung-ho gave way to dunno and the pound was cast adrift. It fell by an average of 0.2%, losing about half a cent each to the US dollar, the euro and the Swiss franc.

Australia Day

Monday marked the 231st anniversary of Australia's colonisation by Britain. Australians celebrated around the barbie and the rest of the world apparently took the day off in sympathy. Economic data were few and of minimal importance.

European Central Bank president Mario Draghi made an appearance at the European Parliament in Brussels, where he took questions on monetary policy. He told MEPs that "softer external demand" was partly to blame for the recent slowdown in Euroland, and that the situation was not serious enough to require fresh stimulus.

"If things go very wrong, we can still resume other instruments in our toolbox", though "at this point in time, we don't see such contingency as likely to materialise, certainly this year". The euro added a fifth of a US cent, all of which came before Sig. Draghi said his piece.

Everybody vote…Now!

The NZ trade data released overnight showed a slightly wider-than-expected surplus in December and were largely in line with forecast. They did not affect the NZ dollar, which is unchanged on the day. A downturn in Australian business conditions was only briefly damaging to the Aussie.

Other than US house prices (Case-Shiller) and consumer confidence (Conference Board) there are no important ecostats on today's agenda. The most important US figures remain stuck in the pipeline as a result of the government shutdown and there is nothing from the UK or the euro zone.

The Commons votes will come after London has officially knocked off for the day but that will not stop investors paying them close attention. It would be odd not to see some reaction from sterling this evening.  

GBP a little lower as investors prepare for Commons votes

GBP a little lower as investors prepare for Commons votes

AUD flat despite weaker business conditions

AUD flat despite weaker business conditions

NZD unchanged after on-target trade data

NZD unchanged after on-target trade data

EUR firmer after Draghi visits Brussels

EUR firmer after Draghi visits Brussels

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