Market News & Analysis
Daily Brexit update: Sterling nods at sketchy talk
Ken Odeluga January 12, 2019 3:27 AM
Daily Brexit update: Sterling nods at sketchy talk
Theresa May says ‘no’, but some senior ministers have said ‘it’s increasingly likely’. The talk of the day is that Brexit could be delayed. London’s Evening Standard newspaper cited anonymous cabinet members suggesting the long-scheduled 29th March date on which Britain is set leave the European Union may no longer apply. The reason, according to the paper: a backlog of legislation has built to such an extent that if the withdrawal bill is defeated, as looks likely, the resulting snarl-up of process would leave little time to get the bills through Parliament necessary for an orderly exit.
The accuracy of the reports is impossible to judge at this stage. It is also unclear whether a delay would be legally possible. Article 50 was invoked on 29th March 2017 and cannot itself be revoked by the applicant – the UK. Whether the act of EU withdrawal, can be renegotiated however, is less clear cut. Taking back a decision to leave was the subject of high-level EU legal discussions late last year. The tentative conclusion was that The Lisbon Treaty probably doesn’t forbid a country from withdrawing its application to leave.
But it’s not the intent to leave that’s in question on Friday, according to reports. At least not yet. And only the European Council can provide an extension of the ‘negotiation period’, by unanimous agreement. So, the rationale of those supposedly seeking a delayed Brexit seems tautological, quite like a pretext, and not particularly realistic.
Still, there may now be three broad inputs into the market’s next reaction: the outcome of Tuesday’s parliamentary vote; what the government does as a consequence; and any further moves towards a delayed exit date.
How this affects our Brexit Top 10 markets:
GBP/USD: Sterling against the dollar extended the day’s gains to $1.2866, the best since 23rd November. This month’s range so far is intact with nearest key support at almost $1.28 dead.
GBP/JPY: A big swoosh by sterling versus its most demanding currency, yet still long-standing psychological forces resist ¥140, near ¥139.91, where an aggressive sell-off to two-year lows was triggered in December.
EUR/USD: The most abstracted market relative to Friday’s talk. Partly why the rate continued its slide from $1.1570 on Wednesday to $1.1470 at last look, down 0.3% on the session.
EUR/GBP: Sterling gained less emphatically against the euro, pulling the pair down to an 0.8919 low, about three quarters to the bottom of its monthly range.
UK 100: The ease of the pound’s advance was enough to spook blue-chip equity investors, pushing the FTSE 100 off a mild gain into a 0.4% loss by close. More sterling-friendly mid-cap shares took the FTSE 250 up 0.6%, one of the sturdier performances in a less sure-footed European session.
Germany 30: A more flaccid day for global markets left the DAX down 0.3%.
Lloyds: The largest domestic bank fell, though less than the market, losing 0.1%. That’s a sceptical investor reaction.
Barclays: Barclays dropped 1.3% tracking a softening Wall Street session.
Shell: Shares in global multinationals are ending the week lower. Oil shares are also pressured by a slump in crude prices which have also run up sharply since early January. Shell fell 1.2%
BP: The smaller oil major also lost about 1%
Join market analyst Fiona Cincotta as she looks at how the vote could unfold and the potential market impact. Register now: cityindex.co.uk/market-outlook…
This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.
GAIN Capital Singapore Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the GAIN Capital group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), GAIN Capital Singapore Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact GAIN Capital Singapore Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.
In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither GAIN Capital Singapore Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.
GAIN Capital Singapore Pte. Ltd. is not under any obligation to update this report.
Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit cityindex.com.sg for the complete Risk Disclosure Statement.
Cryptocurrencies are not legal tender currency and trading of derivatives on Cryptocurrencies are currently not covered under any regulatory regime in Singapore. Consequently, investors should be aware they do not have protection under the Securities and Futures Act (Cap. 289). Please ensure that you are fully aware of the risks.