ews of a breakdown in talks between the US and North Korea contributed to the risk off mode, as did worsening sentiment regarding US-China trade discussions and some soft macroeconomic data out of Asia’s largest economy. Talks between the US and North Korea, which it had been hoped would yield progress towards denuclearisation, broke down with no suggestion of a third summit at this time. Hopes of an agreement over trade between the US and China were also dealt somewhat of a blow after US Trade Representative Robert Lighthizer stated that it was ‘too early’ to predict the outcome of talks.

Meanwhile, the critical EUR/USD rate was fairly ranged bound again yesterday, with a lack of major market news leading to a fairly quiet trading session. There was little new information out of Fed Chair Powell’s appearance in front of Congress, with the central bank chief instead hinting that there would be an announcement on the Fed’s balance sheet plan ‘fairly soon’.

Attention now turns to a handful of important economic data releases across both sides of the Atlantic. First up will be this afternoon’s German inflation numbers for February, generally seen as a decent gauge for the more critical Euro-wide release on Friday. At 13:30 GMT we’ll also see the release of the preliminary US GDP numbers for the fourth quarter. A greater slowdown than the 2.3% annualised number pencilled in could lead to a broadly weaker US Dollar this afternoon.

Sterling hits fresh highs on hopes of A50 extension

The Pound continued to edge higher against its major peers on Wednesday, hitting a fresh 21-month high against the Euro, while racing to our end of Q1 forecasts against the US Dollar.

The market remains highly confident that a ‘no deal’ Brexit will be avoided, sentiment towards which has driven almost the entirety of Sterling action so far in 2019. The few days leading up to 12th March, when the next parliamentary vote is set to take place, are now seen as some of the most important days in UK politics in a while. Any indication in the lead up to the vote that MPs are ready to back the Cooper amendment, or any form of alteration that ensures a delayed Article 50, would likely provide continued support for the Pound in the coming weeks.

On the data front, tomorrow morning’s manufacturing PMI will be worth watching out for, although focus remains squarely on Brexit.