What’s been happening? The pound slipped against the euro and US dollar yesterday after comments made by Brexit Secretary David Davis on Sunday suggested the UK would seek to change the terms of the phase one Brexit agreement only just finalised with the EU. Davis described the agreement, which was hastily arranged at the end of last week after disagreements over the future of the Irish border threatened to scupper talks, as a ‘statement of intent’. When setting out the terms of the agreement in a letter to MPs at the end of last week, Theresa May concluded that ‘nothing is agreed until everything is agreed’. Taken together, May and Davis’ comments seemed to suggest the UK was intent upon changing the terms of the phase one agreement, which saw markets selling Sterling on fears that this vacillating position could hamper attempts secure a transitional agreement. GBP/EUR exchange rate losses were softened thanks the release of poor retail sales figures from Italy. With no other Eurozone data released for markets to react to, a worse than expected -1% month on month decline, causing a surprise -2.1% year-on-year decline, in Italian retail sales had a greater impact on euro sentiment than it would usually. While Friday’s stronger than expected non-farm payrolls figures continued to support the US dollar yesterday, the fact that wage growth remains sluggish limited the scope for USD appreciation. This is because markets are worried that the more long-term outlook exhibited by the Federal Reserve during this week’s monetary policy meeting will be more downbeat than hoped. | 
