Sterling buffeted by politics, but lives to...>

FOREX: Sterling buffeted by politics, but lives to fight another day

-After a quiet Asian and European session, US traders bid up the USD against

almost all other FX ahead of Fed Chair Powell's testimony. Powell's initial

commentary came and went with no mention of the yield curve and largely repeated

recent commentary on inflation, growth and trade wars - leaving USD with little

reason to rally further.

-GBP was a slightly different story, dropping sharply (GBP/USD dropped below

$1.31) as markets speculated the government would lose a Commons vote and be

forced to pursue Customs Union membership in a 'no deal' scenario. Nonetheless,

PM May narrowly avoided defeat (largely due to threats of a further election),

helping GBP off the lows, but still ensuring its the worst performer in G10.

-NZD performed well as the central bank's inflation model surged, helping

NZD/GBP rise at the fastest pace in over a month and briefly break above the

100-dma.

-UK inflation, US housing data and Powell's 2nd testimony fill the calendar

Weds.