FX round-up: Risk aversion sweeps over market ahead of Brexit votes

A succession of bad news out of China resulted in a wave of risk aversion at the start of the week, as investors waited on the results of a raft of key risk events, including trade talks between Washington and Beijing, a US central bank policy meeting, another key Brexit vote in the UK and key data releases on Friday.

Included among the latter were manufacturing sector survey results in China and the States and the monthly US non-farm payrolls report.

Ahead of those, at the weekend the National Bureau of Statistics reported a 1.9% year-on-year decline in Chinese industrial profits for the month of December.

Those figures were followed later in the day by warnings out of US corporate heavyweights, Caterpillar and Nvidia, that they would not meet analysts' estimates for their profits and sales in the current quarter, respectively, with both firms blaming China to different degrees.

By and large, analysts appeared to be expecting Chinese economic data to begin showing an improvement relatively soon, but not until the second quarter of 2019 in the case of Bank of America-Merrill Lynch.

Against that backdrop, as of 1824 GMT cable was down by 0.38% to 1.31638, while against the euro the pound was off by 0.52% to 1.1510.

The House of Commons will vote on the Prime Minister's so-called 'Plan B' as well on proposed amendments to the bill which might allow MPs to force the government to extend Article 50.

In particular, traders were focused on two bills which, according to Samuel Tombs at Pantheon Macroeconomics, appeared to have the greatest chance of success.

The first of those would require the PM to go for an extension of Article 50 if Parliament had not approved her so-called 'Plan B' by 26 February.

Another, more controversial amendment, would allow groups of as few as 10 lawmakers to table motions on Brexit on 5 February, as long as members from all four parties were included in their ranks.

Reflecting the risk-off mood, dollar/yen was also on the back foot, slipping by 0.24% to 109.25, even as euro/dollar added 0.18% to 1.14365.

The US dollar spot index meanwhile was drifting down by 0.12% to 95.6810.