GBP jitters back on as the market fears a Brexit deal rejection
We can see that the knives are out for GBP again, as the prospects of Theresa May getting 'her' Brexit deal through parliament look slim to minimal at best. The meaningful vote looks set to take place in around 2 weeks from now - the week starting the 10th of December. Until then, the PM will be lobbying hard to try and win over as many supporters as possible, though anyone watching the House of Commons session on Monday would have seen the clear weight of disapproval against her.
The DUP are clearly against the backstop agreement which could put Northern Ireland in a temporary period of alignment with the EU and effectively established a border with the rest of the UK, so it is clear that they will not vote for the deal.
Pro Brexit MPs are also worried that any temporary backstop may run longer and perhaps indefinitely and ultimately tie the hands of the UK to strike deals with the rest of the world - this despite assurances that it will not.
From the Labour benches, and indeed the LibDems, there is an overwhelming desire to push for a second referendum as MPs here argue that the deal is worse than staying in the EU under its current membership.
There has been some positive data out this morning in the form of the CBI Distributive Trades Survey, which has come in at a better than expected 19 vs 10 expected for Nov, and improvement from 5 seen in Oct.
GBP is, however, not reacting to domestic data at the present time as the Brexit saga is what continues to drive trade. Cable took out support in the 1.2790-1.2800 area this morning and still has eyes for a move on the lower 1.2700's, with the tailwind of broader USD demand seen right across the board.
EUR/GBP is also pushing north though, with the cross rate having been cushioned in the mid 0.8800's in recent sessions. We see 0.8920-40 as the immediate target from here and a strong push through - perhaps on any fresh Brexit developments could line up a later move for 0.9000.