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·         Sterling briefly surged to two-month highs against the dollar on Monday after a report, subsequently denied, that a pro-Brexit faction of lawmakers could support Prime Minister Theresa May's Brexit divorce deal in parliament.

The denial by ERG member Steve Baker knocked sterling off two-month highs of $1.2930 though it stayed 0.3 percent up on the day at $1.2876 by 12:00 p.m. ET.

However, the outlook remains uncertain - a last-minute Brexit deal, a disorderly or no-deal exit, a new referendum or remaining in the bloc are all seen as possible.

But analysts noted growing signs parliament was prepared to exercise its clout to prevent a no-deal or "hard" Brexit.

·         "What it tells you is that the situation is very fluid but also that parliament is definitely asserting its power on the policy process," Societe Generale strategist Alvin Tan said.

"Chances of a no-deal Brexit have fallen but there remains great uncertainty about the terminal point of this."

·         In the currency market, the dollar index, which measures the greenback against a basket of its peers, last traded at 95.610. The Japanese yen, considered a safe-haven asset, fetched 108.33 to the dollar.

·         When will the vote take place?

Before the actual vote takes place, the final day of debates will have to be concluded and MPs will have to vote on several amendments of the motion, selected by the Speaker John Bercow.

As a result, the vote is expected to take place any time from 7pm.

 

·         Prime Minister Theresa May’s Brexit plan is widely expected to fail in parliament Tuesday, but the defeat could still trigger a violent market reaction.

·         “We could see knee-jerk volatility. She could lose by a historic margin. This could be a historic loss by the government,” said Marc Chandler, Bannockburn Global Forex chief market strategist. Chandler said the U.K. government has only ever had three votes go down in parliament by more than 100 votes, and this could be a fourth.

·         U.S. strategists are watching the vote closely, and the outcome could be announced sometime in the afternoon east coast time. If the vote fails, May then has three days to come up with an alternative way to move forward to separate the U.K. from the European Union. She would also be at risk of a no-confidence vote, and parliament could seize the process of forming a Brexit plan.

·         “If the government gets crushed, then you have a big risk off move,” said Michael Schumacher, director of rate strategy at Wells Fargo. “If it’s a close defeat, you might see equities do okay.” He said there could be a big move in short-end Treasury yields if the vote and headlines around it trigger a big flight to quality.

 

 

·         British Prime Minister Theresa May will force a second parliamentary vote on her Brexit deal despite facing defeat, The Sun reported on Monday.

·         The British parliament is widely expected to vote against May’s deal on Tuesday, opening up outcomes ranging from a disorderly divorce to reversing Brexit.

·         Allies claim that German Chancellor Angela Merkel has offered May last-minute help after saying the European Union could grant extra concessions if MPs reject her deal, the report said.

 

 

·         President Donald Trump on Monday predicted the United States would reach a deal with China to end a tit-for-tat trade war, saying Beijing wants to negotiate and that talks are going well.

·         “We’re doing very well with China,” Trump told reporters at the White House. “I think that we are going to be able to do a deal with China.”

·         Trump has vowed to increase tariffs on $200 billion worth of Chinese imports on March 2 if China fails to address intellectual property theft, forced technology transfers and other non-tariff barriers.

 

·         President Donald Trump on Monday rejected a Republican call for temporarily reopening shuttered U.S. government agencies in order to encourage negotiations with Democrats on border security issues, as a partial government shutdown limped through its 24th day.

 

 

·         Oil prices fell on Monday after data showed weakening imports and exports in China, the world’s second-largest oil consumer, raising the prospect of a slowdown in fuel demand.

·         Brent crude, the international benchmark, fell $1.48, or 2.5 percent, to $59 a barrel around 2:30 p.m. ET, trading as low as $59.37 intraday. U.S. crude ended Monday’s session down $1.08, or 2.1 percent, at $50.51.

Reference: CNBC