The Pound had extended its recent gains with GBP/USD hitting almost 1.3270 overnight before opening lower at around 1.3250.
Sterling looking upwards on expectations that the UK cabinet will support an increase in the Brexit bill under certain conditions. No figure is being made public at present, but it is expected to be put to the EU at least a week before the next European Council meeting mid-December.
For the moment GBP is not being driven by interest rate expectations. Instead all eyes are on how domestic politics will play out after the UK Budget speech on Wednesday.
The US Dollar had a quiet start to what is anticipated to be a slow week in the lead up to Thanksgiving on Thursday. Mondays movement was largely based around the sentiment towards the EUR following the political news in Germany.
There is little US economic data today with most of the focus looking to the FOMC minutes on Wednesday.
Monday was a day of twists and turns for the Euro even after the failure of Chancellor Angela Merkel to form a coalition. Merkel, who has headed three coalitions in the last 12 years, said she would stand again as a candidate if elections were called in the New Year.
The euro was hurt again later in the day by comments from ECB President Mario Draghi. Draghi testified before the European Parliament’s economic committee and highlighted wage growth was still lacking and inflation was not quite on a trend upwards. Therefore, markets concluding that economic stimulus is still necessary in the Eurozone.