uring a speech in London, Davis stated that reaching a deal was not only the best outcome but by far and away the most likely, although Britain was ready for talks to fail. Meanwhile, it was reported that Theresa May has paved the way for Britain to pay the EU a £40bn Brexit ‘divorce bill’ in an attempt to break the deadlock in withdrawal negotiations.

Sterling traders paid little attention to yesterday morning’s industrial trends survey data from CBI, which came in far above expectations at 17 versus the 3 consensus. Investors instead focused on relatively hawkish comments from Bank of England rate-setter Vlieghe and Saunders who both spoke on Tuesday morning.

Vlieghe, one of the 7 BoE members along with Saunders to vote for an immediate interest rate hike at the November meeting, warned against waiting for all signs to support a rate hike for risk of hiking too late. Michael Saunders, one of the more vocal members of the committee in favour of higher rates, explicitly claimed that he thought likely rates would rise over time at a pace broadly consistent with market pricing. This would be a somewhat faster pace than many economists are currently pencilling in.

With no economic data releases in the UK today, the Pound may take its cue from today’s Budget from Chancellor Philip Hammond. Hammond will be under pressure to counter slow growth, falling real incomes and weak productivity in the UK.

ECB member Coeure hints at September end to QE programme

News out of both the US and Eurozone economies were fairly limited yesterday. EUR/USD spent much of the day in a tight range. Existing home sales in the US did surprise to the upside, growing by 2% compared to the 0.7% consensus, although this was not materially strong enough to shift the greenback. ECB member Coeure also spoke in the Eurozone, hinting that the central bank’s bond buying programme could be ditched in September 2018.

All eyes now turn to the release of this evening’s FOMC meeting minutes. We think that the minutes will point to the recent signs of strength in the US economy and the increasing confidence among the committee that inflation will return to target. Any resemblance of a hawkish tilt during communications tonight should all but cement another rate hike in the US in December.

However, with traders in the US off for much of the week due to the Thanksgiving holiday, trading this week should see limited liquidity. More tax reform developments are unlikely to come before the end of the Thanksgiving break.