EMISSIONS: EU End-Of-Day Carbon Summary: EUAs, UKAs Rise on US-Iran Ceasefire

• The DMO is expected to publish the consultation agenda for next week's GEMM and investor meetings regarding FQ1 (April to June) gilt operations. Within this, the number of auctions in each maturity bucket will be outlined as well as any new gilts expected. Finally, the number of syndications (and maturity buckets) will be outlined. We'd expect one medium gilt syndication in FQ1 and pencil in April (with a new 10-year gilt likely to be launched). There may also be a long/link syndication suggested.
• Chancellor Reeves is due to give an update also shortly after 15:30. She isn't expected to announce any specific policy and we think the most likely policy response to the Middle East conflict (if there is one) would be a delay to the September fuel duty increase. However, it is too early to expect that.

• Renewed downside for crude over the past hour continues to weigh modestly on the greenback, with the likes of MXN in the EM space now tilting into positive territory on the session. As noted, the firmer/more stable sentiment overall is providing support to the higher beta currencies, and helps GBPUSD extend its recovery in recent trade to the 1.34 handle, closing the gap to last Friday’s close at 1.3415.
• For cable, that represents a near 120 pip reversal from the intra-day lows which feel just shy of the 1.3253 low from last week. Recent cable weakness resulted in the breach of a number of important short-term support levels, which will make developments in energy prices this week very important to monitor in assessing whether downside momentum may stall for the pair.
• Bank of America has noted GBP showing impressive resilience against the backdrop of elevated geopolitical uncertainty. They think the nature of the initial shock has defined broader G10 FX price action: a combination of relative terms of trade shifts and FX positioning. BofA believe GBP resilience should continue, but their concerns are two-fold: cross-asset measures of volatility remain muted; whilst macro data is yet to capture in the impact on inflation and sentiment.
• Rising volatility presents the greatest risk to GBP whilst the vol curve is underpricing risks around the UK local elections. BofA think the case for hedging GBP risk is well advised.

The New York Post reports that US President Donald Trump told the outlet that he is "nowhere near" the point of deploying US ground troops to Iran. Regarding speculation that US special forces could be deployed to safeguard fissile material at the Isfahan nuclear enrichment facility, Trump said, “We haven’t made any decision on that. We’re nowhere near it.” 

• Needless to say, the deployment of any US ground troops would mark a major escalation in the conflict and carry risks of the war turning into a much more protracted affair, and of significantly damaging the president's standing domestically should US military casualties increase. The counter to this being, the prospect of US and Israeli troops on the ground could steer Iran towards major concessions to avoid ground operations that could presage full regime change.
• Regarding the appointment of Mojtaba Khamenei as Iran's next supreme leader, Trump said to the Post, “Not going to tell you. I’m not happy with him.” He did not repeat earlier threats to eliminate any successor to the late Ayatollah Ali Khamenei, who was chosen without Trump's personal input.
• MNI's latest US Daily Brief carries further analysis of the reports surrounding the prospect of US and/or Israeli troops being deployed on the ground (see MNI POLITICAL RISK - Iran War Weighs On Global Economy)