The market will focus on Politics today as Prime Minister Boris Johnson will welcome his new tranche of Conservative MPs when they arrive in Westminster before the first day of the new parliament. Johnson, whose decision to call a snap election paid off in resounding fashion last week when voters returned him to Downing Street with what he called a “stonking” majority, will welcome the 109 new MPs in an address later today. His main priority will be securing parliament’s approval to proceed with a 31 January Brexit after MPs scuppered his move to quit the EU by 31 October.
It is believed the Withdrawal Agreement Bill detailing Johnson’s plan to leave the EU could appear in the Commons on Friday. Johnson has insisted the transition period will not be extended beyond 31 December 2020, giving him just under a year to strike an agreement on the UK and EU’s future trading terms. The Withdrawal agreement is likely to get through Parliament with ease, given the large majority that the Conservatives have. The market will now look to price in the second phase of Brexit, namely how the future trade agreement will look.
China and the States have agreed on what is becoming known as Phase One of a trade deal. The details of the deal were announced on Friday last week and meant that tariffs intended for $160 billion in Chinese imports due to be in place Sunday have been suspended. In addition, the States have cut the value of the September 1st tariffs in half from 15% to 7.5%. While this is certainly viewed as progress, there are still key details yet unclear. The trade deal will likely provide relief for commodity underwritten currencies, in particular, the AUD (which experienced 3.5 year lows against the GBP last week)
Currency wise Sterling has come off the highs that we saw last week, GBPUSD is currently trading in the mid 1.33’s having been as high as 1.35 early Friday morning. Just this morning we have seen the pair drop one cent from 1.3440 down to the current level of 1.3340. GBPEUR has also seen a drop from 1.2045 down to 1.1985 this morning. The primary reason for this is likely to be profit taking as investors unwind long sterling positions after the Conservatives resounding win.
The figures are based on the live mid-market rate, correct as of 09:00 GMT on 16/12//2019, and are provided for indicative purposes only. Live mid-market rates are not available to consumers and are for informational purposes only. The rates we quote for money transfer can be selected via the page on our website ‘Live Money Transfer rates’.
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