16 January, 2017
A speech from Theresa May is one of the key events for financial markets this week and certainly the most relevant for the British pound. Primie Minister is about to deliver a speech on UK’s stance and conditions ahead of the triggering article 50 and beginning the Brexit negotiations.
The news of the speech alone had a negative impact on the GBP, as the currency seems unable to take advantage of solid macroeconomic data amid "hard Brexit" concerns. Namely, investors are worried that the UK government will put economic reasoning on the back seat as it tries to please eurosceptics that backed the EU-exit.
According to the Guardian, people close to May say she is going to signal that:
UK must be prepared to leave EU customs union
regain full control of its borders, even if that means losing access to the single market
cease to be subject to rulings by the European court of justice
Well, if that’s indeed the case, ramifications for the UK economy - and impact on the pound - will not be positive, and this is exactly what the markets are discounting. The newspaper claims that May will stress that "The losers have the responsibility to respect the legitimacy of the (Brexit vote) result".
GBPUSD sinks below the key support zone ahead of the May’s speech. Source: xStation5
The GBPUSD opened a week with a Bearish gap even though the US dollar has been under pressure on its own. At the same time it’s a break below a support from late 2016 and while an exact low from a 2016 flash crash is disputed, it’s 1.20 that it’s treated as an ultimate support. Even though GBP buyers are trying to regroup now, bears made the first step to bring us to sub-1.20 reality.
The speech has been scheduled for Tuesday, timing remains unspecified.
We've presented two bearish views on the EUR (including our own and the one from DB). JPMorgan Chase is also bearish on the currency. According to bank’s analysts EUR could fall ~10% to about 0.98 versus dollar over a few weeks on Le Pen victory in France...
It’s a double Super Thursday for the GBP today. A "typical" Super Thursday...
Oil has spiked higher on Al Falih comments in Davos (Saudi oil minister). He said during a panel discussion at WEF in Davos...
USD was taking damage from the Wednesday Donald Trump specch until yesterday evening. Lack of details on economic and fiscal agenda...
The FTSE 100 is higher by a little more than 20 points at the time of writing as the so-called Santa Claus rally appears to have begun. Observers of the markets have for many years noticed a strong propensity for stocks to rise in the period between Christmas...
Today calendar is relatively light, although some interesting figures were and are due. Morning has begun with a Chinese data, and the European session was commenced by the data from both Germany and France...
The releases in Canada and the USA coming this afternoon qualify as key market drivers of the week as we pointed out on Monday. The first part of the day was also interesting from the fx perspective despite the pre-holidays mood settling in...
Oil prices are moving higher today and we are already at the previous peak before Libya announced its plans to add around 270 thousand barrels per day to the pace at which it extracts the commodity in 1Q...
ECB board member Benoit Coeure commented the yesterday decision in a radio interview. The central bank announced QE tapering stressing that it does not mean less engagement...