Market Brief: Sterling Pounded
Fawad Razaqzada September 2, 2019 12:27 PM
- GBP has been pounded on Brexit turmoil and weakness in UK data, while USD has continued to shine even if North America is out today due to Labor Day.
- The pound slumped as investors became more concerned that they may have underestimated the risks of a no-deal Brexit. Some of them clearly panicked today and stampeded for the exits as speculation grew louder that PM Boris Johnson was preparing to call an early election should MPs vote to delay Brexit in an attempt to avoid a no-deal scenario. The prospects of an early election means more uncertainty, and markets generally don’t like uncertainty. Also hurting the pound was news that the manufacturing PMI weakened to its lowest level since July 2012.
- European stocks came off their highs and US index futures turned negative again after Bloomberg reported that Chinese and US officials were struggling to agree on the schedule for a planned meeting this month to continue trade talks. This came after the US government rejected China’s request to delay tariffs that took effect over the weekend. But the UK’s FTSE 100 retained most of its early gains as stocks of multinational companies – which generate most of their earnings outside the UK – were boosted by a soft pound.
- The above headlines also helped to keep safe-haven gold supported for now, although the precious metal could be heading lower anyway judging by THESE technical and fundamental considerations.
- Investors are eying RBA and Aussie data during the Asian hours.
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