Good morning,
GBP: UK politics a laughing stock?
It doesn’t matter whether you’re a seasoned political reporter with years’ of experience or just a casual observer, you still don’t know what happens next. Having trawled through various pieces of research, and exhausting Twitter and the tabloids, it seems no one had factored in a postponement which is why GBP took such a kicking yesterday. It wasn’t the defeat the market had priced in, but a defeat in principle and Theresa May took quite a bashing for it. GBPUSD last traded at 1.2575 in June 2017 and GBPEUR reached the August lows of 1.1004/0.9087 in the space of two hours.
Theresa May and her team decided that the humiliation of delaying the vote would be a lesser blow than taking on a majority defeat in the commons. She is currently on her way to visit European leaders with the intention of further discussing the UK’s option. The EU has made it abundantly clear that this is the only UK/EU Brexit deal available, and there will be no renegotiations. I don’t believe she will come back with any substantial changes and so will have to face the lion’s den once more – you can just picture the pound grimacing at this prospect.
UK average earnings and claiming count is due out for October and November at 09:30 and these are forecast to remain flat.
USD: Trade talks resume
Last night the US Treasury Secretary Stephen Mnuchin spoke with China to resume the next steps in their trade deal. This was seen as a positive given the tension generated from Huawei’s CFO detainment and China’s clear protest about the arrest. Bloomberg picked up that both sides are making a clear effort to keep the two above issues separate.
Have a great day.