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Dollar fights back

The dollar is higher against a basket of currencies today, helped by rising bond yields and a week packed with U.S. data starting with a central bank policy decision, though the broader outlook remains murky for the greenback.

Sterling against the Euro lost gains on Friday despite solid UK GDP data showing that the UK economy expanded 0.5% q/q in Q4 (slightly higher than the 0.4% expected).

There are several important dates in the calendar for GBP this week: EU27 ministers will meet in Brussels to finalise Brexit directives on today, Mark Carney is due to speak before lawmakers on Tuesday and there will be the PMI manufacturing index on Thursday.

Brexit risk premium has declined substantially in recent weeks and while we still expect pound/euro to break lower eventually on Brexit clarification, it is still very early days of the second round of Brexit talks.

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