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By xemarketanalysis March 13, 2019 11:10 am
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    XE Market Analysis: More Brexit Drama Likely to Rock the British Pound

    OVERVIEW

    • The US dollar is trading within a tight range amidst Brexit uncertainty

    • GBP/USD is making timid recovery as MPs gather to vote on a no-deal exit

    • Gold adds $5.5 to trade above $1,300 an ounce with investors seeking the refuge of safe assets.

    HIGHLIGHT

    Brexit continues to grip the attention of the market. PM Theresa May suffered another defeat in the House of Commons despite claims the second version was an improved offer. GBP USD recorded a wide trading range of nearly 2%.  The pair is now making timid recovery ahead of a second vote. The MPs will decide today if the UK is leaving without a deal on March 29th. This is likely to be rejected, leaving the option to extend the exit date.

    US DOLLAR

    The Brexit drama continues to unfold in the British Parliament where the MPs are due to vote again today. PM Theresa May’s improved Withdrawal Plan was heavily defeated in the House of Commons. Today, the House will most likely reject a no-deal proposal, and it is expected to vote for a third time tomorrow on an extension of the Brexit date.

    With 16 days to go, it is becoming clearer that uncertainty over Brexit will stay with us for a while. The Pound is in a temporary recovery mode, up 0.7% against the greenback. In the US, the producer price index was up 0.1% in February while the advance report on durable goods was up 0.4%.  Meanwhile, the market will also be keeping a tab on a slew of Chinese data to be released later today: retail sales, industrial production and employment data will provide further updates on the economic health.

    BRITISH POUND

    UK Parliament voted down the last-minute Strasbourg Withdrawal Plan yesterday, sending the market in chaos. The MPs meet again to vote on a no-deal Brexit which is likely to be defeated, then paving the way for an extension of the Article 50 period. The British Pound will continue to trade under a volatile session.

    EURO

    EUR/USD is trading around the 1.13 handle with the Brexit vote continuing to be the main driver for the currency. Italian quarterly unemployment rate increased 10.6%, above market expectations whilst there was welcome news from Germany. Industrial production was up 1.4% in January. The pair is staying near the four-day high and awaits more development around Brexit.

    CANADIAN DOLLAR

    USD/CAD is trading flat, looking for fresh direction after declining for the fourth consecutive session. The Canadian loonie is driven by global economic events and stronger oil prices. WTI is trading near an 8-day high, up 1.21% on the day.  The economic calendar is light and market will be closely watching for BoC Deputy Governor Wilkins’ speech on risks to global growth scheduled for tomorrow.

    AUSTRALIAN DOLLAR

    The Australian dollar continues to look for sunnier news, perhaps definitive news on the US-China trade front, or possibly increased demand for iron ore. The former is likely to happen sooner than the latter. In the meantime, the USD AUD pair is hovering around 1.141. 

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