Brexit News

Markets lose sense of direction on trade fear risks

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Asian markets were in risk aversion mode after more US-China worries set the US Dollar moving downwards overnight. Trade talks between the US and China seemed to be moving backwards instead of forwards, as the anticipated trade tariff roll backs seem to move farther into the distance. The uncertainty over the ongoing trade wars and dashed hopes of reaching a conclusion have driven volatility in the currency markets, as investors are moving to the traditional “safe haven” currencies and Gold. From the US perspective, it seems like the trade talks can wait. The markets, however, aren’t so sure.

Sterling slides on weak manufacturing data

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British shoppers bucked the trend and spent more in November than anyone forecast. When you adjust for the shifting black Friday event, the growth is just below 1% year on year. Sterling held its ground on the news but had already been knocked by poor manufacturing data released yesterday.

Sterling unmoved ahead of further political polls

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The vile, meaningless murders committed on London Bridge on Friday have generated some rather unsavoury politicking around crime and punishment but none of the politics has affected the Pound. We are due a number of election polls this week, however, and some interesting data. Today's Manufacturing Purchasing Managers' Index (PMI) unfortunately showed further contraction to 48.9 for November, under that 50.0 growth figure, but the more influential Service Sector release is also due this week. We are 10 days from a general election and we expect more fireworks on that.
Collection of british coins

The Pound rises after political poll

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The Pound is still riding high after the Yougov polls predicted a majority for the Tories but, much more importantly, a step closer to certainty, something that has been in very short supply in the UK over the last 4 years. Even Boris Johnson’s portrayal as a melting ice sculpture hasn’t diminished that lead.

Political poll perks up the Pound

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Last night, a major poll suggested that the Conservative Party is on track to achieve their best General Election result since 1987 with a 68-seat majority. The latest YouGov poll anticipates heavy losses for the Labour Party in the regions of the UK that have traditionally voted for the opposition. The poll also suggests that the Liberal Democrats could lose Members of Parliament off the back of a poor showing in the election. The YouGov poll actually predicted the result of the 2017 general election, so markets are putting some stock into the predictions, to a point… The Pound has picked up a little since its dip when the previous poll suggested that Labour was closing the gap on the Tories.

Much more for markets before there is time to be thankful

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You would be forgiven for thinking that it may be quiet in the US for Thanksgiving week, but there are a number of key economic announcements expected and, as always, a public holiday can lead to increased activity in the currency markets

30 sleeps until Christmas, 17 to Election Day

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Only 30 sleeps to Christmas and 17 to the Brexit vote. We can only dream the turnout is as huge as the 71% of Hong Kong citizens who turned out, queued for hours and gave the establishment a bloody nose by rejecting the old guard. With that kind of participation and a decisive result, maybe the debate over what the British public believed or did not believe in June 2016 can be put to rest. The Hong Kong Dollar, which had been gently strengthening over the past few weeks, weakened significantly as the results were announced. Clearly no one believes this is the end of Hong Kong’s problems.

Sterling banknotes

Sterling ignores Labour’s big spending manifesto

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The markets largely ignored the launch of the Labour party’s big spending manifesto yesterday. A Tory majority is roughly a 2:1 bet in the financial markets, so labour’s plans are seen as a wish list which is unlikely to be fulfilled but there’s many a slip twixt cup and lip as grandmothers used to say. Hence. Sterling is pretty much where it was at the start of yesterday’s trade.  That may change when we see this morning’s manufacturing and service sector PMI releases. The ‘no change’ point in these index is 50. Last month’s manufacturing reading was 49.6 and the service one was a flat 50.0. Anything above that will be good for the Pound.

US-China tensions bite back

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As if the US and China didn’t have enough disagreements, the US Congress is condemning China’s handing of the Hong Kong protests and that has escalated tensions once again. The impact in the financial markets is a general shift of investor funds into the safety of US Treasuries; causing the 10 year bond yields to fall and, oddly, we have also seen the US Dollar weaken a tad.  At the interbank level, Sterling is pushing above USD 1.29 again and the Euro is half a cent higher; just below USD 1.11.

Trade and political tensions driving currency markets

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The data diary for the US is light this week, in the run up to the Thanksgiving holiday, but some key announcements include Tuesday’s home construction figures and the Jobless Claims report due on Thursday. Housing starts showed a drop for September, which was hoped to be a temporary blip, so those keeping a close eye on the US markets will have been relieved to see a significant rebound this time around, with building permits up to the highest level since 2007.