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Sterling gets choppy as Commons takes centre stage

Article By: ,  Senior Market Analyst
September 5, 2019 5:02 AM
Sterling gets choppy as Commons takes centre stage

It is all about politics in the markets at the moment. As the Boris Johnson government has progressively lost control of the situation, so sterling has rallied. It now looks more likely that a coalition of rebel Conservative MPs and opposition parties will take a no deal Brexit off the table with legislation, which was what the market was hoping for.

The pound climbed from around 1.218 vs the USD last night to hit 1.226 before slumping again in overnight trade. It saw a big tactical sell off from overnight levels down to 1.2215 before starting to stage another rally. This is the sort of volatility in sterling we were expecting in what is a dramatic week in UK politics.

The next obstacle will be whether Labour will rise to Johnson’s challenge of an election in October..

US and China agree to Washington sit down talks

The US and China will be re-starting trade talks next month. There had been very little obvious progress in these talks over the summer months. The decision has been take to hold ministerial-level talks in Washington, which some analysts regard as evidence that both sides are creeping closer to something more substantive.

The news had an immediate impact on Asian markets, with the CSI 300 index of leading Chinese stocks rising 1.8%. Japan’s Topix index was also up more than 2%. Right now both sides are nowhere close to where they were in April, but the US economy is starting to feel the pain from the Chinese tariffs, particularly states with a heavy agricultural bias.

FTSE marginally lower but Melrose surprises

The FTSE has opened slightly down this morning, giving up almost all over yesterday afternoon’s final surge. Melrose Industries was up over 7% following better than expected first half numbers. The company also said it would be raising its dividend by 10%.

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