Market News & Analysis
Pound unconcerned over OBR downgrade
Fiona Cincotta March 13, 2019 11:15 PM
It’s hardly surprising that Brexit is overshadowing the Spring Statement this year. The pound rallied across the session in the wake of Theresa May’s defeat and as Parliament prepares to reject a no deal Brexit later today. Not even the OBR could rain on the pound’s parade today.
Growth Forecasts Lowered
The OBR confirmed that the immediate prospects for the economy are poor and this was well known heading into the Spring Statement. Q4 GDP was a lacklustre 0.2%, so the fact the GDP forecasts for 2019 has been revised lower to 1.2%, down from 1.6% is nothing new for the markets to chew on. This explains why the pound shrugged off the forecasts and Hammond pressed forwards quickly.
Borrowing is down, high tax receipts, wages are up, and job creation is strong. According to Hammond the economy is remarkably robust despite the Brexit cloud hanging over it. There was plenty for the markets to like, including a “deal dividend” should the UK agree a Brexit deal with the EU. However, it is also fair to say that the Spring Statement will barely register as Brexit uncertainty hangs over businesses and the pound remains focused on the remaining votes in Parliament this week. Not even Hammonds warnings over a no deal Brexit hitting the economy could take the wind out of the sales of the pound.
No Deal Brexit Vote
Brexit optimism is pushing the pound towards $1.32, up a staggering 100 points, not bad given the future of the UK looks so uncertainty. Whilst traders are focused on the upcoming vote, it is also worth pointing out that tonight’s vote is not legally binding. Whilst Parliament may express a wish not to leave the EU in a disorderly fashion, that doesn’t mean it won’t happen. At these levels the pound continues to look on the optimistic side, disbelieving that the UK could crash out of the EU in just two weeks.
The stronger pound ensured the FTSE lagged behind its European counterparts. Whilst it was in positive territory, up 0.1%, this was behind the Dax which traded 0.2% higher. Wall Street was also on the front foot, including the Dow as Boeing finally turned a corner.
Boeing moves tentatively higher
Boeing shed 13% across the past week as country after country grounded the MAX 8 737 plane amid growing concerns over the safety of the plane. The Federal Aviation Association (FAA) saying they found no issues with the plane has helped restore a grain of confidence back in Boeing enabling its share price to move tentatively higher.
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.