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By xemarketanalysis October 18, 2019 11:23 am
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    XE Market Analysis: Brexit: Have We Reached the End Game?

    OVERVIEW

    • UK Parliamentarians will vote on the latest Brexit agreement tomorrow
    • The greenback is broadly lower
    • Japanese inflation data met expectations at 0.3%

    HIGHLIGHT

    According to Sir Elton John, Saturday night's alright for fighting. Hopefully, that applies to Saturday too, because things are bound to get heated in UK parliament tomorrow. The House of Commons retakes centre stage over the coming days. In the U.K., PM Johnson hopes to gather enough vote from MPs in the Parliament for his divorce plan from the EU.

    After long, painful months of uncertainty, the UK is expected to leave the EU on October 31st. Yet there are still may days between today and Halloween. There might be a Shakespearean plot twist in store when the members are summoned to the House tomorrow. 

    USD GBP 10 18 Close 1.28872

    US DOLLAR

    The greenback is trading broadly lower this morning with investors seek the safety of traditional “safe-haven” assets. With no core data at play, the market leaves itself open to the chirps and cheeps from the Twitterati. 

     

    BRITISH POUND

    Sterling sits near a five-month high and all eyes will be on the UK’s Parliament tomorrow. MPs will debate the merits or rather the demerits of the new Withdrawal Agreement reached with the EU. At this point, it is unclear if the said agreement meets the expectations of members. There also uncertainty if the deal will attract enough votes to exit the EU on October 31st. We expect the GBP to remain volatile and there could be a risk of reversals in recent gains. Hopefully, Speaker  John Bercow will be in his usual fine form as he calls for "Order!." 

    EURO

    EUR/USD continues to consolidate around the mid-point of 1.11 after the EU endorsed the latest Withdrawal Agreement with the UK and which includes a revised Protocol on Ireland / Northern Ireland, and revised Political Declaration on the framework of the future EU-UK relationship.

    The shared currency now holds its breath as this new exit plan is put to test in the UK Parliament this Saturday. Meanwhile, the market seems to ignore the fact that, as from today, the U.S is applying WTO-approved tariffs on certain EU goods. This comes after the US recently won a $7.5 billion arbitration award in the Airbus subsidies case.

    CANADIAN DOLLAR

    USD/CAD is trading near a three-month low over broad-based US dollar weakness. Voters in Canada go to the booth this Monday and if polls are to be believed, we could see a minority Federal government. The CAD has, so far, shown a little reaction from local politics. Investors have stuck to core economic fundamentals and seen the currency appreciate 0.8% over the past five sessions.

    AUSTRALIAN DOLLAR

    The strong job gains and low unemployment rate from a couple of days ago continue to support the Aussie dollar. Not even weaker performance from the Chinese economy could dampen the dollarydoo which now hovers in the mid 0.6800s. 

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