Battling May surviving, for now
November 20th: Highlights
- Prime Minister refuses to accept her agreement won’t pass through Parliament
- Dollar correction as stocks fall
- EU preparing disciplinary measures for Rome
Yet another numbers game!
There were “boasts” from the Brexiteer European Reform Group that there were up to eighty “rebels” prepared to vote down the proposed agreement. Now it appears that they are struggling to rouse the forty-eight signatures necessary to challenge the leader. It can still happen and there is no doubt furious action taking place behind the scenes to encourage waverers to issue their letters.
Irrespective of Mrs May’s future, it is highly unlikely that the agreement will be accepted by MPs. The opposition have said they will vote against, the SNP will vote against, the DUP, which props up the Government have said they will vote against, particularly since they yesterday accused the Government of failing to keep its side of the deal made following last year’s General Election, and there will be several rebels from the Government benches.
The pound took something of a breather yesterday “only” trading in a 90-pip range versus the dollar, closing a little firmer at 1.2850.
Nothing lasts forever
There have now been several comments from members of the FOMC expressing doubts over the continued program of rate hikes since there may be a slowdown coming in growth due to factors both internal and external. The December hike is pretty much set in stone but the Q4 growth data will be eagerly anticipate and studied for signs of a slowdown.
There seems to be a battle developing as to which will be the weaker currency going forward the GBP, beset by Brexit driven concerns over the Government, the euro with the Italian budget crisis and a weakening economy or the dollar with its emerging set of concerns.
Yesterday, the dollar index fell again. It Reached a low of 96.11 before closing just a few pips higher at 96.19. This was one reason for the rallies in both the GBP and EUR which make up close to 70% of the dollar index.
Macron calls for closer ties (again)
One analyst was quoted yesterday as saying that “when you are up to your waist in quicksand, it doesn’t pay to kneel down”. It may be that given the nationalist breeze blowing through the region it will better to solve a few current issues before creating new ones.
The EU council meets tomorrow with the Italian budget crisis at the top of its agenda and an announcement of sanctions against Rome for its non-compliance with the rules of the growth and stability pact expected. Of course, being an EU body, it is just as likely to give Rome more time in the hope that they have a change of heart. Given the defiant rhetoric emerging form the coalition government any change is highly unlikely at best.
There a minor sign of the nationalistic feeling still below the surface in Madrid as a rally to mark the death of the Fascist Dictator Francisco Franco was interrupted by a few demonstrators who were dealt with in short time by police. While insignificant it shows the strength of feeling such displays can generate.
The single currency gained yesterday on the back of the dollars newly found difficulties although its range was narrow. It reached a high of 1.1464, closing at 1.1452.
Have a great day!
About Alan Hill
Alan has been involved in the FX market for more than 25 years and brings a wealth of experience to his content. His knowledge has been gained while trading through some of the most volatile periods of recent history. His commentary relies on an understanding of past events and how they will affect future market performance.”