Sterling up as Parliament is shuttered for five weeks
Fiona Cincotta September 10, 2019 9:12 AM
The more defeats the government suffers, the higher the pound seems to rally.
The more defeats the government suffers, the higher the pound seems to rally. We saw a big rise in sterling vs the USD yesterday to above the 1.2340 level, which it has managed to maintain since. There has been further buying in sterling as European markets opened. Sterling is now the best performing G10 currency over the last 30 days, with most of that upside coming since Boris Johnson lost control of Parliament.
The prime minister has now prorogued Parliament, effectively shutting down further debate until the middle of October. Johnson was again refused the prospect of an election in yet another defeat for the government in the Commons last night.
Traders will be watching what the government does very closely. Sterling was also boosted by positive economic data which saw the UK economy grow by 0.3% in July.
Banks up despite ongoing PPI impact fears
The FTSE opened down marginally this morning. Lloyds Bank, Barclays and HSBC were all in the green as they bounced back from news of a last minute rush of PPI claims in August. Banks like Lloyds and Co-op have already said they expect last minute requests to hit financial performance in Q2-3. Lloyds is still well down on its July levels following heavy selling in August.
China data pushes Asian and European markets down
China’s blue chip share index, the CSI300, was down 0.41% overnight as more negative economic data emerged. This also pulled down most Asian exchanges, although the Nikkei still managed to finish in positive territory.
We are seeing more focus on the response of central banks to the slowdown however, with all eyes on the ECB on Thursday, where there is the expectation that some form of stimulus package will be announced. Also on the radar is the Fed meeting next week when the US central bank is expected to cut rates.
Disclaimer: The information on this web site 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. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.