What’s been happening? Early gains for GBP/EUR and GBP/USD exchange rate were quickly shed yesterday, with the pound unable to capitalise on hawkish comments from Bank of England (BoE) policymaker Gertjan Vlieghe. Vlieghe, who is known as one of the most cautious members of the Monetary Policy Committee (MPC), stated that the Bank of England was on a trajectory of interest rate hikes, rather than November’s tightening being simply a one-off followed by a long break. This further reinforces the comments made by the MPC last week following their latest monetary policy meeting that UK borrowing costs are likely to rise at a faster-than-expected pace. The euro was largely on soft form, with market focus on the US as traders prepared for President Donald Trump to reveal his long-awaited infrastructure plan. Also weighing on euro sentiment was news that Martin Schultz was stepping down as leader of Germany’s Social Democratic Party (SPD). That reminded markets of the upcoming vote amongst SPD members regarding whether or not the party will accept Angela Merkel’s offer of a third ‘grand coalition’; their refusal would mean Germany would have to head back to the polls after a full four months without effective government. Trump’s infrastructure plan was met with a mixed response, which prevented the US dollar from recording strong gains. On the one hand, markets welcomed the appearance of the plan, which has been promised for some time and has so far shown few signs of materialising. However, analysts were sceptical that the proposal would make it through Congress, as well as noting that the plan relies on parties other than the government to come up with much of the funds required to meet Trump’s targeted outlay of ‘at least $1.5 trillion’. | 
