China News

What a week! And it’s only Wednesday…

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Trick or treat? There should be plenty of both this week and it should be a busy one for currency markets, with no fewer than three important central bank meetings and a raft of important economic data worldwide, including Gross Domestic Product (GDP), employment figures and consumer confidence indices. On the other side, Friday brings a new month and with it a raft of Purchasing Managers Indices (PMI), always watched for economic indicators and meaningful nuggets for the markets.

MPs agree to hold general election!

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It seems no one told the Pound that a UK election was called yesterday. Sterling shimmied but stayed roughly where it started the day. Maybe that’s because the same group of MPs voted against an election the previous day. Oh, the games people play! Either way, it is very exciting… if you like that kind of thing. I guess all we can hope for, when the votes are counted on 13th December, is a decisive result, so that life can carry on without MPs ruining it all by talking. Sterling starts Wednesday just below €1.16 and just below $1.29. 

Prepare for Sterling surprises today

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Sterling rose a little yesterday, driven by two factors. The slowdown in UK retail sales was shown to be easing slightly and, whilst the British Prime Minister failed to get his election bill through Parliament, he has a cunning plan which will involve avoiding the 2/3 majority needed in that vote. A simple majority should see an election called and we ought to know as soon as today whether that is a goer. So the Pound was up half a cent against the Euro and slightly less against the US Dollar. It doesn’t look like this morning’s Nationwide house price index will set Sterling on fire, so we will have to wait for this election proposal and its reception in the House of Commons. Whereas, calling an election usually weakens a currency, the potential for clarity and certainty might actually strengthen the Pound, so be ready for that.

Newsflash: EU approves ‘flexible’ 31 Jan Brexit extension

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Ahem, Swing low, sweet Chari-o-ot, coming for to carry me hoooooooome…. Just one word… ‘Awesome’! I make no apologies for having a croaky voice this morning after one of the most complete England performances most of us have ever seen. Commiserations to Wales, especially Alun Wyn Jones. It would have been good to see you progress to the final.
We may get a vote in Parliament on whether there will be a General Election before Christmas… whoopdidoo! I suspect, on the principle of turkeys not voting for Christmas, the motion will be rejected, but the PM has threatened to bring it back to the House of Commons every day until it gets approved.

Stop – dilemma time!

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You know that moment when you arrive at a mini roundabout at the same time as three other cars and everyone stops because no one knows whose right of way it is and you all feel a bit foolish for not taking the initiative? Well that is Brexit right now. The UK Prime Minist er wants a deal but can’t move until Parliament debates it. If he can’t get that, he wants an election. The opposition will only go for that if he rules out a World Trade Organization (WTO) rules exit, the so called ‘no deal’, but he won’t. The opposition wants longer to debate the bill but the Prime Minister wants to see what the EU will do over his unsigned extension request while they are waiting to see what the UK parliament will do over the time allocated for the bill’s debate. For crying out loud, would somebody just make a damned decision, so we can all get on with our lives? Rant over… well, not quite.
We may get a vote in Parliament on whether there will be a General Election before Christmas… whoopdidoo! I suspect, on the principle of turkeys not voting for Christmas, the motion will be rejected, but the PM has threatened to bring it back to the House of Commons every day until it gets approved.

Brexit awaiting EU’s decision

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The EU is said to be generally supportive to giving UK another Brexit extensions. But there are some minor differences on the duration and a final decision might not be made until Friday. The question is on whether to follow European Council President Donald Tusk’s recommendation of a three-month delay through a “written procedure” or a much shorter delay which would be the preference of French President Macron. It has been reported that Mr Macron would prefer a 2 week delay in order to keep the pressure on UK MP’s and not lose momentum. A shorter delay would put pressure on the Pound as this would elevate the risks of No deal which has been largely priced out by markets.

What to watch out for this week and what you may have missed so far

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This week is comparatively quiet as far as economic data is concerned, but there is still plenty of political fuel for currency volatility originating right across the globe. Highlights include Draghi’s last speech at the helm of the European Central Bank, ongoing Brexit and US-China trade talk sagas, all interspersed with some economic data releases across Europe and the Americas.

Brexit deal approved but delays cause talk of an election

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A brief recap... Parliament voted for the Brexit deal but voted to take their time reviewing it. That caused Sterling to dip and bounce a little and caused the Prime Minister to pause the progress of his bill until the EU decides whether to extend the exit date. Meanwhile the extension is either until 31st January or a few days, dependent on whether you believe the president of the European Central Bank (ECB) or the President of France.  Ultimately nobody really knows what is going on, except the electorate, who are convinced we need a new set of politicians. Maybe the UK public will get its say soon, because a general election and proxy second referendum is highly likely.

Sterling unstable as John Bercow denies meaningful vote

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Speaker, John Bercow’s decision not to allow the government to put a vote to parliament for approval of the Prime Minister’s deal was like someone turning the gas down under the pan the Pound had been cooking in. Sterling went from hot to simmer and we have seen half a cent knocked off the value of Sterling in the last 24 hours.  The detailed machinations of the next few days of politicking are as convoluted as they are frustrating. Ultimately, it seems the PM will have to go through the motions of passing the bill to leave the EU whilst the rabble alliance plots to thwart the UK’s exit once again. Further referenda and all manner of disruption are being cobbled together.  Bercow himself was directly accused of bias in the House of Commons and also by his own deputy. Smoke and fire spring to mind.

Prime Minister to seek conclusive ‘yes or no’ vote on proposed Brexit deal

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Anyone who thought Brexit would be settled by Saturday afternoon was very disappointed. There is a chance Boris Johnson’s deal may be approved today though but the speaker, John Bercow will have to grant the government the motion to vote on the package. Whatever the outcome, the Number 10 team seem set to get the UK out of EU clutches by 31st October. Sterling held up well, taking barely half a backward step, despite the Letwin delay and we start this week with the British Pound commanding $1.29 against the US Dollar and the GBPEUR exchange rate at €1.1560. The Pound is also at the top end of its range against the Australasian currencies and the Canadian Dollar.