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By xemarketanalysis December 11, 2018 9:54 am
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    XE Market Analysis: British Pound Feeling Ill As Brexit Deal Vote Rollercoaster Ride Stuck in Limbo

    OVERVIEW

    • The Dollar Index remains in negative territory after PPI edged 0.1% in November 
    • Sterling plummet to its lowest level since April 2017 after PM postpones the key vote in Parliament 
    • NYMEX WTI Crude advancing 1.47% and gold is up near $1250 an ounce

    HIGHLIGHT

    Investors showed their utter frustration sending the GBP to a 20-month after PM May deferred the meaningful vote on Brexit deal.  The UK leaves the EU bloc on March 29, and the officials are yet to agree on a deal for a smooth transition. The PM believes the current agreement is the best deal possible, whilst Parliamentary opposition rages about its lack of clarity and substance. 

    US DOLLAR

    The US Dollar Index is trading in negative territory, down 0.2% as we move into the North American session. The British Pound is recovering after coming under severe selling pressure following Brexit deal debacle in the Parliament. Investors shifted their focus, albeit temporarily, to real economic data. WTI oil is bouncing off the psychological level of $50.00, trading 1.3% higher. The economic calendar is relatively light, and we expect the market to be driven by developments surrounding ongoing US-China trade talks.

    BRITISH POUND

    The British Pound came under severe selling pressure, slumping 250 basis points after Prime Minister, Theresa May stated in the House of Commons, confirming the ’meaningful vote' scheduled for today will be deferred. Better-than-expected wage data currently prop up the currency. The latest releases from the UK Office for National Statistics showed average weekly earnings increased by 3.3% compared with a year earlier. The unemployment rate is unchanged at 4.1%, which is lower than a year ago. The PM is flying back to Brussels to seek further “assurances” from the EU, but the officials from the other side are adamant: the current deal is the only deal, and there will be no renegotiations.

     

    EURO

    EUR/USD is struggling to maintain its momentum above the 1.14 handle and is trading 0.2% higher on the day. The German ZEW Economic Sentiment was slightly better than expected but remains in negative territory. Growth is projected to be weak in Q4 because of growing tensions in international trade and Brexit. This sentiment echoes similar concerns from yesterday’s Sentix economic index which fell for the fourth time in a row to minus 0.3. Investors prefer to avoid any major bets ahead of a crucial ECB meeting this week.

    CANADIAN DOLLAR

    USDCAD is coming off the high of the day around 1.3420s as investors are concerned about inversion in the Canadian yield curve. Lower oil prices are also weighing on the loonie. The pair is expected to trade along broader market sentiment as there are no major local data releases this week.

    AUSTRALIAN DOLLAR

    AUD/USD is trading stronger, up 0.45% making a sharp reversal from a near one-month low. The pair jumped on news that China and the US are close to making a “big” announcement on trade tariffs. This news helped to improve investors’ mood after the price index for residential properties fell by 1.5% in the September quarter. 

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