Pound hits 2-week high above 1.34

The boost sterling received from Tuesday’s better than expected services PMI release has pushed the pound to a 2-week high above 1.34 against the US dollar. The FTSE has made a bright start to the session recapturing the 7700 level but gains could be capped if this pound strength persists.

Labour looks to attract Brexit rebels

The opposition Labour party appears to be attempting to woo any Brexit rebels from the Tories with the submission of an amendment to the Brexit Withdrawal Bill which pushes for a “soft” Brexit. The move calls for full access to the single market although Corbyn still rejects the possibility of freedom of movement within the EU - a prerequisite to the aforementioned access. PM May is set to face a crucial vote on Brexit next week and it looks like Labour are seeking a rebellion amongst remainers by pushing for a “softer” deal.

Italian bounce fades

News towards the end of last week that a coalition government would in fact be formed in Italy caused a relief rally in the markets, with government bonds rallying and the FTSE MIB beginning sharply higher on Friday. However, as the dust settles the positivity has at least partly receded with Italian yields rising once more and stocks in Milan dropping to their lowest level of the week. The case for European equities has not been helped by some reported ECB leaks, that suggest the central bank will debate an exit to their asset purchase programme (APP) at next week’s meeting. The withdrawal of stimulus at a time when the strong economic performance seen last year has pulled-back markedly would weigh further on European markets, which have lagged their US counterparts in recent weeks due to the latest batch of political uncertainty.  

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