There is a lack of noteworthy economic data releases for the UK this morning, meaning the main focus returns to Brexit in the run up to tomorrow’s vote on Theresa May’s ‘Plan B’. Despite this, the British currency has continued to slip over the course of the morning as investors book their profits in Sterling following last week’s stellar performance, in which the pound soared to a 19-month high against the euro. Central to tomorrow’s Brexit discussions is an amendment forwarded by Sir Graham Brady and Andrew Murrison, known as the Brady Amendment, which proposes that the entire Irish backstop agreement be dumped by the government and the EU, or that a firm time limit would be placed on such an arrangement. Mrs May is being urged to back the amendment as part of her Brexit withdrawal agreement, and if she does it would be enforced by a so-called three-line-whip, meaning it would likely pass through the House.
Nevertheless, the EU has not indicated that it would allow a time limit on the backstop.
In fact, Michel Barnier, European Chief Negotiator, said during last week’s session that a time limit on the backstop would be “useless” – an ‘inconvenient truth’ that is keeping Sterling traders nervous ahead of tomorrow’s vote.
Later this afternoon Mark Carney, the Governor of the Bank of England, is due to make an appearance when he participates in a question and answer session with other members of the Monetary Policy Committee about the ‘Future of Money’.
As ever, any downbeat comments from Mr Carney about Brexit could send the pound sharply lower.
Prior to this, another former Goldman Sachs banker, President of the European Central Bank (ECB) Mario Draghi, is also due to talk when he testifies before the European Parliament about EU monetary matters.
Investors will be keeping an ear out for any hints about interest rates from the Italian policymaker.
It seems probable the ECB will remain dovish for an extended period after it was revealed the bloc was edging closer to stagnation.
It comes after disappointing PMIs and previous dovish comments from Mr Draghi, likely giving uplift to the pound euro exchange rate.