CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
☰
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
✖

Daily Brexit update A Right Royal Nudge

Article By: ,  Financial Analyst
January 25, 2019 4:00 PM

Daily Brexit update: A right Royal nudge

Britain’s official default stance in negotiations with the EU is still that the UK is prepared for a no-deal Brexit. It’s the same one that’s been reiterated throughout the process. The crucial difference added over the last few days, by senior ministers, on their own behalf, and Prime Minister Theresa May’s, is to stress that ‘no-deal’ would suck. The point was underlined again on Friday by Chancellor of the Exchequer, Philip Hammond, Britain’s top finance minister. The PM was “committed to getting a deal,” and “willing to compromise”, he said.  This comes after the signs we noted earlier this week among Brexit supporting Tory rebels. In turn, government supporters are now inching closer to those demanding more flexibility on red lines, chiefly the notion that a ‘no-deal’ is an option. It’s even possible that a broader convergence away from “dug in” positions—to quote Hammond again—is afoot.

A report in the Tory-supporting Sun newspaper said Northern Ireland’s DUP party, whose votes prop up the government, could be warming to May’s deal. The predictable condition, of course, is that the EU must add a time-limit to the backstop plan. The EU continues to insist that no such guarantees will be forthcoming. Still, the DUP could be signalling that a form of agreement is becoming more possible. This, after the Queen called for a “coming together to seek out the common ground”. Her words are unlikely to have more than superficial impact, but they appear to have sent ripples into Brexit protagonists’ angst-ridden collective consciousness. This doesn’t change the reckoning for Parliament’s second vote on Theresa May’s bill on Tuesday much. But it does little to reverse investors’ increased confidence that a market-friendly EU divorce, at worst, is in sight.

How this affects our Brexit Top 10 markets:

GBP/USD: Technical and fundamental indications of sterling’s improving health keep coming. On course for its biggest rise in 15 months, the pound has paced its closely watched 200-day moving average—last at $1.3059—for the first time since May with flying colours.  The rate continues to set new 3-month peaks as the last session of the week wraps up in the U.S. after its best one-day rise of the month. That’s in keeping with option market implied volatility grinding to deeper two-month lows. Topping-out technical indicators like the daily slow stochastic oscillator now flag downside checks as increasingly appropriate. But that $1.3059 can be relied on for support as sights get set on reversal tops at $1.3246-$1.3297 in September and October.

GBP/JPY: Sterling pulls further away from its long-time psychological bugbear of ¥140 after a three big-figure move in just three days, again pointing to a deep change in underlying sentiment. Bulls will next target tight consolidation between ¥144.6 and high ¥145s late in November backed by former resistance-turned-back-to-support of ¥142.75.

EUR/USD: With downside limited by the ECB’s narrowed window as to when it could begin raising rates, the $1.13 floor is holding. Retreating risk aversion has done the rest, leaving the fibre still up 110 pips on the day and lots of room in terms of momentum gauges and quarterly range top around $1.15.

EUR/GBP: Not such a clear move vs. the euro, possibly reflecting single-currency firming elsewhere and the pound’s solid 2% sprint over the week. Sterling stalls almost bang on support for the cross of 0.8617, where it bounced sharply in mid-April.

UK 100: Increasingly muscular sterling isn’t the best look for the FTSE’s health and the index continues to undershoot the January global stock market rally. March futures extend the ‘cash’ index’s 0.1% Friday fall to more like -0.5% though there were tell-tale individual signs of strength.

Germany 30: DAX’s 1.4% rise backs the stability of improved sentiment whilst some pleasant earnings surprises were also a big help.

Lloyds: a 1.5% Lloyds rise underpins investors’ read of Brexit prospects.

Barclays: A 0.8% rise is in step with a decent Wall Street session.

Tesco: The high street is expected to get a fillip as deal prospects improve, helping the top retailer to outperform the market with a 0.9% rise

Barratt: Barrett fell 0.5% on Friday though is way ahead of the broader market in January with a 16% climb.

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. CFD and Forex Trading are leveraged products and your capital is at risk. They may not be suitable for everyone. Please ensure you fully understand the risks involved by reading our full risk warning.

City Index is a trading name of StoneX Financial Ltd. Head and Registered Office: 1st Floor, Moor House, 120 London Wall, London, EC2Y 5ET. StoneX Financial Ltd is a company registered in England and Wales, number: 05616586. Authorised and regulated by the Financial Conduct Authority. FCA Register Number: 446717.

City Index is a trademark of StoneX Financial Ltd.

The information on this website is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement.

© City Index 2024