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Geopolitics to Dominate in Data Light Week

Trade optimism and a more dovish Fed meant that the Dow and the S&P closed Friday on higher ground. Noticeably, the Nasdaq was unable to secure a positive close as traders' desire to move into growth stocks is clearly diminishing – a renowned sign of weaker sentiment.

Whilst Trump’s comments on Friday provided optimism over progress in trade tensions with China, Mike Pence’s conflicting remarks over the weekend at an APEC meeting indicated that progress was still unlikely. Asian markets traded carefully higher overnight thanks to the Fed’s more cautious tone regarding the global economy, whilst conflicting.

This week sees a light economic calendar. This means traders will have little choice but to focus their full attention on geopolitical developments surrounding trade and Brexit.

No Getting Away from Brexit

There will be no escaping Brexit as trading begins for the new week. Brexit will dominate traders’ minds from every angle, as we wait to see whether the magic number of 48 letters has been received by Sir Graham Brady. The 1922 Committee Chairman confirmed that the number has not been reached on Sunday. This offered little condolence to the pound, which was trading lower again as the new week kicked off, pulling $1.28 into focus for a near-term target.

Theresa May continues fighting for her political life after the exodus of Brexit Secretary Dominic Raab (among other ministers) who resigned in disagreement over her Brexit deal with the EU. What happens this week is anyone’s guess, what is for sure is that this is a crucial week for Theresa May and Brexit which means it is a crucial week for the pound. We expect volatility in the pound to remain at elevated levels particularly if a vote of no confidence is called.

How A Vote of No Confidence Could Impact the Pound?

In the case of a vote of no confidence, the two possible outcomes are, one, that Theresa May wins. This would be the preferred outcome for the pound and boost sterling. However, we expect any pound gains to be capped and sterling to remain under pressure. Theresa May will still have the almighty challenge of getting Parliament to pass the Brexit deal; a task which many political analysts consider to be mathematically impossible, as things currently stand.

The second possible outcome is that Theresa May loses a vote of no confidence. We consider this outcome to be less likely. Should Theresa May lose a vote of no confidence, the pound will drop sharply, targeting $1.25 as the chances of a Brexit deal being agreed will be drastically reduced. As Theresa May pointed out throughout this weekend, a leadership battle will distract the Conservatives from the task in hand of achieving a good Brexit deal.


The information and comments provided herein under no circumstances are to be considered an offer or solicitation to invest and nothing herein should be construed as investment advice. The information provided is believed to be accurate at the date the information is produced. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Please note that 79 % of our retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing money.

14-12-2020

GBP jumps on Brexit talks extension
The British pound has jumped in early trading this week after the UK Prime Minister and EU Commission President agreed to extend Brexit talks beyond Sunday. MARKETSThe S&P 500 fell on Friday, wrapping up a losing week, as the outlook for additional fiscal… Read more

10-12-2020

AirBnB IPO today
At its IPO price of $6 per share, Airbnb ABNB, is expected to raise at least $3.5 billion with an initial market capitalization topping $40 billion. MARKETSStocks fell on Wednesday, retreating from the record highs set earlier in the day, as tech shares strug… Read more

9-12-2020

S&P 500 closes over 3,700
MARKETSThe S&P 500 closed above 3,700 for the first time ever on Tuesday as Pfizer started to roll out its coronavirus vaccine in the U.K., lifting hope of the economy recovering in the near future. The Dow Jones gained 0.4% while the Nasdaq Composite clim… Read more

8-12-2020

Global stock market cap reaches $100 trillion for 1st time
The value of all the stocks in the world put together has reached a giant $100 trillion for the first time. MARKETSThe Dow fell 0.69% Monday, led by Intel and broad-based weakness in value stocks as rising Covid-19 restrictions offset optimism over an imminen… Read more

4-12-2020

Pfizer vaccine supply chain problems
MARKETS The S&P 500 fell slightly from record high. Major U.S stocks indices cut gains quickly in the final hour of trading after Dow Jones reported Pfizer now expects to ship half of the doses it had previously planned this year after finding raw materia… Read more

2-12-2020

Dollar Purge Continues
The US dollar dropped to fresh two-and-a-half year lows on Tuesday, with EUR/USD rising above the widely-watched 1.20 handle. MARKETSNews• Stocks in Asia-Pacific were mixed in Wednesday morning trade after major indexes on Wall Street surged to record highs o… Read more

1-12-2020

Bitcoin hits record high
The price of Bitcoin climbed 8.7% on Monday to reach a fresh record high of $19,857.03 - overtaking its previous peak made in 2017. MARKETSNews• Asia stocks rise as the Caixin/Markit manufacturing Purchasing Managers’ Index for November came in at 54.9 — its… Read more

30-11-2020

OPEC meeting starts
Today OPEC+ begin a 2-day meeting to decide whether to begin producing an extra 2 million barrels per day of oil, or delay for another 3-6 months. MARKETSNews• Asia-Pacific markets are mixed this morning while S&P 500 futures are down half a per cent. Ind… Read more