FX round-up: Sterling firms as House of Lords' Brexit discussion begins

Sterling was overall firmer Monday as UK's House of Lords began discussing Prime Minister Theresa May's Brexit Bill, perhaps suggesting a curious sense of hope, while the US dollar drifted lower due to the Presidents Day holiday there.

At 17:27 GMT, sterling was up 0.4% to $1.2462, while it firmed 0.37% to €1.1736. It also gained against commodity currencies the aussie, loonie, kiwi and rand, as well as the yen.

"The FTSE 100 was little changed as the pound edged higher against the euro and the US dollar," said Jasper Lawler, senior market analyst at London Capital Group.

This, he said, was despite tough talk from the EU's head Brexit negotiator, Michel Barnier, ahead of discussion in the House of Lords over the divisive Brexit Bill.

SpreadEx financial analyst Connor Campbell added that sterling's gain on the pound was arguably a result of a Eurozone currency worried by the debt-laden Greece saga and jitters over the looming French elections.

Nevertheless, FXTM research analyst Lukman Otunuga opined that heightened political risks around Brexit have ensured sterling vulnerability in Q1 2017.

"While economic data from the UK has on many occasions displayed signs of resilience post-vote to leave the European Union, it is the persistent uncertainty which has effectively dented investor attraction towards the pound," said Otunuga in a statement.

"The live threat of economic fundamentals discarded amid the Brexit developments could punish sterling further, with investors solely directing their attention towards how the UK economy fares after the Article 50 is invoked in early March," he added.

Meantime, there was little action in the dollar, this undoubtedly linked to the long weekend there and resultant absence of many traders from their desks.

The dollar-spot index slipped 0.09% to $100.860, while the greenback itself made minor falls against the euro, aussie, loonie and kiwi, but tacked on a little versus the rand and yen.

"The pound has been the best performer today by quite some way, with weakness in the US dollar helping in that regard," said Michael Hewson, chief market analyst of CMC Markets UK.

The dollar's weakness was helped by the latest CBI factory orders data, which showed the best level of activity in two years, he added.

"Inflation expectations also came in higher, though some of that was related to the bad weather in Spain which caused the recent courgette and lettuce shortage," said Hewson.

Finally, US Federal Reserve Bank of Cleveland President Loretta Mester said she would be comfortable with a rise in US rates now as inflation pressures accelerated.

This followed Fed chair Janet Yellen last week showing her hawkish hand, prompting a greenback rally.