Daily Brexit update Late night flights for sterling and May
On the night before Parliament decides on Theresa May’s Brexit plan, sterling is set for its biggest rise of the month. There is as yet no agreement between London and Brussels, though there are lots of headlines, some of them promising, on the face of it. And at least the ‘meaningful vote’ is still on. Junior Brexit Minister Stephen Barclay this evening announced that all parliamentary votes the Prime Minister has promised will be held. That’s just about all that is clear. The first ballot, planned for tomorrow, which is meant to give MPs a say on the revamped Brexit deal, had, by early evening on Monday no reworked deal to vote on.
Top EU officials and Downing Street have been clear that progress towards unlocking the hiatus on the Northern Ireland Backstop has been largely non-existent. There has been no discernible progress during talks between Attorney General Geoffrey Cox and EU counterparts. Advice from the government’s top lawyer will be published on Tuesday, before Parliament sits. Not that there should be a great deal of mystery about the contents. Michel Barnier's offer of a “new" unilateral exit plan as reported over the weekend was neither new, in the strictest sense, nor likely to be accepted as a failsafe escape by hard-line Brexit supporters. The formula essentially leaves the rest of the UK out of any fall-back plan for Northern Ireland, echoing previously rejected ideas.
As such, the clock continues to tick down; which explains the frantic attempts to foment a breakthrough into the night. The latest reports you may have heard - Theresa May is on her way to Strasbourg to extend discussions that begun in recent days with European Commission President Jean-Claude Juncker in person. The main thing missing from the typical maelstrom of headlines that peppers the news cycle around parliamentary Brexit votes? Substance on matters that could truly melt the ice. It’s one reason why the market in sterling hedges and vol. capture further beyond a month is not exactly on a tear. Participants are most exercised about sterling volatility into the 29th March Brexit deadline and a little beyond. But the drop off in expectations about how sharply the pound might swing afterwards affirms a wide expectation—echoed unofficially in Brussels and London—that Brexit will at worst be delayed. If so, objectively, probabilities of a market-friendly outcome increase.
How this affects our Brexit Top 10 markets:
GBP/USD: 140 pips to the good speaks for itself though, the headline-driven nature of sterling’s market raises strong risks of evaporation. In any case, last week’s $1.3234 open should be scrutinised. The pair was at 1.3155 just now.
GBP/JPY: Sterling had already topped against the yen on the current material (news) with the latest two-hourly high of 146.46 vs. 146.49 implying more fuel is needed for the fire. We look for support around the last market price before publication—146.35—just above a consolidation across the Asia-EU cut on 7th/8th March
EUR/USD: The euro was flailing less, though had already begun to explore the air above last week’s post-ECB lows. Hourly peaks of $1.1258 and then $1.1250 point to the limits of any ‘deal-talk’ fuelled inspiration already having past.
EUR/GBP: The purest Brexit pair respects well-established euro support around .8526 (27th February’s 2019 low) and .8529 (Monday). Only a break below can open up April 2018 sterling highs vs. the single currency on the 86p handle.
UK 100: As ever, any strength relates more to global market sentiment, though sterling’s late acceleration certainly trimmed of the day’s some blue-chip confidence. The market closed 50 points off its best at 7130.6, up 0.4%
Germany 30: The same applies in Germany where the benchmark added 0.8%. Positive sentiment on the country’s two giant banks, which are holding early-stage talks, may have helped.
Lloyds: Investors in the Brexit stock par excellence didn’t buy the ‘news’ as it stood into the cash close, leaving the bank up 0.2%.
Barclays: The more international British bank rose 1.4% with world indices, particularly the U.S.’s, where its turnover is fastest.
Barratt Development: A tell-tale 0.6% fall…that still leaves a return of 30% for the year already.
Tesco: Retailer No.1 also needs something more solid than last-minute hope to rally, hence a 0.4% fall instead.
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 www.cityindex.com/en-sg/terms-and-policies for the complete Risk Disclosure Statement.
ALL TRADING INVOLVES RISKS. LOSSES CAN EXCEED DEPOSITS.
City Index is a trading name of StoneX Financial Pte. Ltd. (“SFP”) for the offering of dealing services in Contracts for Differences (“CFD”). SFP holds a Capital Markets Services Licence issued by the Monetary Authority of Singapore for Dealing in Exchange-Traded Derivatives Contracts, Over-the-Counter Derivatives Contracts, and Spot Foreign Exchange Contracts for the Purposes of Leveraged Foreign Exchange Trading. SFP is also both Derivatives Trading and Clearing member of the Singapore Exchange (“SGX”). SFP is a wholly-owned subsidiary of StoneX Group Inc.
The information provided herein is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to invest, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk.
The information does not represent an offer of, or solicitation for, a transaction in any investment product. Any views and opinions expressed may be changed without an update. To understand the risks and costs involved, please visit the section captioned “Important Information” and the “Risk Disclosure Statement”.
The information herein is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation.
StoneX Financial Pte. Ltd. 1 Raffles Place, #18-61, One Raffles Place Tower 2, Singapore 048616. Tel: 6309 1000. Co. Reg. No.: 201130598R.
This advertisement has not been reviewed by the Monetary Authority of Singapore.
© City Index 2024