UK 'gong show' sees traders tune in

The original Gong Show was a 1976 talent contest in which performers of dubious talent competed for a small prize in front of a trio of judges. Bad acts were “gonged” off the stage in mid-performance. It's 2019 reboot? The British government performing in front of the European Union. EU President Donald Tusk has his hands on the Striker, and the UK is on the verge of being gonged out of the EU.

GBPUSD rallied from 1.2976 at the New York open to 1.3095 at 14:00 GMT on news that Prime Minister Theresa May is flying to Strasbourg to meet EU Commission President Jean-Claude Juncker. She is trying to finalise a Brexit deal, and traders bought sterling in case she succeeds. The rally is a tad questionable as 432 MPs voted against her January 15 plan, and it has not really changed. At best, May will be hoping to get an extension to Article 50, which in itself will be difficult. GBPUSD retreated from the peak on profit-taking.

The GBPUSD rally gave a small lift to the Antipodean currencies and the Canadian dollar. US economic data were not much of a factor; Retail Sales rose 0.2%, which was a tad better than the 0.0% expected, and Business Inventories rose 0.6%. The data didn’t do anything to challenge Federal Reserve chair Jerome Powell’s comment in Friday’s speech when he said: “nothing in the outlook [demands] an immediate policy response and particularly given muted inflation pressures, the Committee has adopted a patient, wait-and-see approach.”

Wall Street liked the Retail Sales data enough that opening losses in the Dow Jones Industrial Average were reversed. However, the index's 0.30% gain (as of 15:00 GMT) lags the 1.36% rally in the Nasdaq and 1.0% gain in the S&P 500.