Market Brief: GBP dumped as Brexit hopes dashed

,

A summary of news and snapshot of moves ahead of the US session.


  • At midday in London, the GBP has gone from being the strongest yesterday to one of the weakest currencies today, although only bettered by the NZD which tumbled to a new 2019 low against the dollar today.
  • GBP/USD has come sharply off overnight highs, allowing the FTSE to rebound again, after Irish Foreign Minister dashed hopes a Brexit deal was imminent. At the time of writing, the cable was testing the key 1.2500 area as support, with FTSE being near 7370-80 resistance. Irish Foreign Minister Simon Coveney said: “I think we need to be honest with people and say that we’re not close to that deal right now. But there is an intent I think by all sides to try and find a landing zone that everybody can live with here." On Thursday, the pound jumped to a 2-month high on after European Commission President Jean-Claude Juncker said a deal was possible.
  • Key data from North America is Canada’s retail sales due at 13:30 BST. Headline sales are expected to have risen 0.4% month-over-month in July, while core sales are seen rising 0.2% on the month.

  • Stock markets remain supported with US equity indices near record levels after a week of central bank bonanza where the message was loud and clear: global interest rates will remain at or near record lows for the foreseeable future. Indeed, the People’s Bank of China became the latest major bank to reduce interest rates overnight. The central bank cut its one-year Loan Prime Rate from 4.25 to 4.20%.
  • Corporate news, courtesy to colleague Ken Odeluga:
    • Brexit-sensitive shares are in focus after sterling's recent rebound appeared to get fresh legs from fresh Brexit deal optimism, albeit fairly short-lived
    • Pound-sensitive FTSE 250 outperformed the FTSE 100 at the open, rising 0.4% vs. +0.1% by the benchmark index, although the latter caught up as the pound eased off its highs.
    • Next has rebounded 2.6%, as one of the UK's biggest clothing retailer recoups some Thursday's drop linked to a sales warning. Europe's apparel sector benefits, with M&S, Inditex, H&M and Boohoo also firm.
    • House builders advanced, led by Barratt Developments, supermarkets also got a look, triggering rallies of 1%-2% for Sainsbury's, Tesco and Morrisons though UK-focused banks benefited most. Metro and CYBG both rose more than 6% at one point.
    • Thomas Cook shares dropped more than 15% to a new all-time low after it requested an extra £200m from stakeholders as the talks continues to finalise the restructuring plan to save the company.
    • Rolls-Royce slumped almost 4% after the company said it expects problems with its Trent 1000 engines to take longer than expected to fix.

Disclaimer

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.

StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX 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), StoneX Financial 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 StoneX Financial 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 StoneX Financial 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.

StoneX Financial 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.