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By xemarketanalysis December 10, 2018 4:42 pm
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    Xe Market Analysis: Sterling Tumbles as Brexit Vote Postponed

    OVERVIEW

    • The Euro hit a three month high against Pound as PM May pulls ‘meaningful vote’
    • Dollar rebounds from the biggest weekly drop in three months
    • Canadian Dollar weakens once again as oil prices decline

    HIGHLIGHT

    Sterling broke through the critical 1.2700 level today on the news that PM May was going to delay the vote in the House of Commons over her Brexit deal. This fact was verified in the PM May's speech made which resulted in the GBP's valuation decline.

    US DOLLAR

    The US Dollar rebounded mildly today against a basket of currencies, following last week's significant drop. The Dollar had its biggest decline in over three months last week but recovered somewhat today. Traders reduced their expectations for a considerable pause in interest rate hikes causing the Dollar to appreciate. This increase occurred despite a weaker-than-expected jobs report on Friday.

    BRITISH POUND

    The Pound weakened by over 1.5% against both the US Dollar and the Euro at its lowest point as PM May postponed the meaningful vote on her Brexit deal. The PM's decision was on the basis she allegedly faced a landslide defeat in the House of Commons on her deal. May will now go to an EU Summit later this week in the hope of winning concessions from the EU on the deal. There is now no concrete date for a new vote on PM May’s deal but we expect the vote to be held after Christmas. We await a possible vote of no confidence in the Prime Minister which could determine the fate of Brexit and leadership of Britain's parliament going forward. 

    EURO

    The Euro hit a three-month high against the Pound on the back of the news the UK Parliamentary vote on the Brexit deal was being postponed to a yet-to-be-determined date. The Italian Budget deficit dilemma still rumbles on. Italy now looks to make changes in their budget to try to cut its budget to the EU’s desired 2% level.

    CANADIAN DOLLAR

    The Canadian Dollar drifted lower against its US counterpart as oil prices continued to fall. The Canadian two and five-year yield curves turned negative for the first time since September of 2007. These developments mean banks now have less incentive to lend for extended terms for multi-year projects.

    AUSTRALIAN DOLLAR

    The Australian Dollar recouped some of its losses in early trading today and is now trending flat on the day. Renewed expectations of further Federal Reserve rate hikes undermined the Aussie’s high yielding advantage. Any problems in the US-China trade truce will see weakness in the high-yielding currencies, but the truce is currently holding.

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