We use cookies on this site to improve your experience and help us provide you with a better website. An explanation of the cookies we use and their purpose can be found within our Cookie Policy. Your continued use of this site means you consent to the use of cookies.
Hide

November

Sterling dips with UK Brexit agreement in doubt

Published: Wednesday 28 November 2018

  • US Dollar strengthens after Federal Reserve’s official comments
  • Bank of England Financial Stability Report later today
​​​​By Charlie Horsley

Sterling slumped against the US Dollar and the Euro yesterday as doubts grew about whether British Prime Minister Theresa May can get a Brexit agreement through a divided parliament. UK Prime Minister May began a tour of the United Kingdom to drum up support for her Brexit divorce deal with the European Union but her deputy said parliament might reject it if asked to vote on it now. Sterling’s losses were compounded by comments from US President Donald Trump that a Brexit deal could hamper trade ties with the United States.
 
In the markets today, the US Dollar has started to edge higher versus a basket of currencies after positive comments from policy makers yesterday. Federal Reserve member Richard Clarida stated that he was an advocate of higher interest rates and expected a move towards more neutral rates in time. He acknowledged that it was difficult to predict where the new neutral level would be and that he was concerned about lower inflation. Markets focused on the talks of more rate rises and the US Dollar rose across the board.
 
Attention then turned to the trade war tensions with China - President Trump said this week that it was “highly unlikely” he would accept China’s request to hold off a planned increase in tariffs. That drove investors to safe-haven currencies such as the US Dollar and the Yen.
 
For the Pound we remain in a holding pattern waiting until the second week of December for further direction. The markets look to be pricing in that the deal won’t go through, so it will be up to May to change the feel around the country ahead of the MP vote.
Joke
 
A new doctor in town meets a 65 year old grandmother for the 1st time. He says, “Before we talk about why you are here today, can we just run through the medication you are taking?”
 
He pulls up a list and starts running through statins and high blood pressure pills and then he says, "Everything looks fine except you appear to be still taking birth control medication.”
 
“Yes.” she says. “It helps me sleep at night.”
 
“I can absolutely confirm that there is nothing in this that has anything to do with insomnia.”
 
“Oh I know that.” She says. “But I live with my daughter and her family and each morning, I take one of these capsules and I pour the contents into my granddaughter’s yoghurt and mix it in. That definitely helps me sleep at night dear."

Today's Major Economic Releases

Market BST Data/Event Previous Expected
USD 13:30 US: Preliminary Gross Domestic Product 3.5% 3.6%
USD 13:30 US: Goods Trade Balance -76.0b -76.7b
USD 13:30 US: Preliminary Gross Domestic Product Price Index 1.7% 1.7%
USD 15:00 US: New Home Sales 553k 583k
GBP 16:30 UK: Bank Stress Test Results    
GBP 16:30 Bank of England Financial Stability Report    

For more information, infographics and the latest currency insights, visit www.halofinancial.com/news