Fundamental Analysis

Pound near 20-month low on Brexit setback

Published on 2018-12-11 11:12 Share
The Brexit

Chinese shares pulled ahead on Tuesday after Beijing confirmed it was still in trade talks with the United States, though sentiment remained fragile in Asia as the pound wallowed near 20-month lows on deepening political turmoil over a Brexit deal. Analysts expect investors to remain cautious given the uncertainty around a durable trade deal between China and the United States. British Prime Minister Theresa May abruptly postponed a parliamentary vote on her Brexit agreement on Monday, a move that hit risk assets globally and sent the pound spiralling down to $1.2505. The move stoked more uncertainty as Britain now faces Brexit without a deal, a last-minute agreement or another EU referendum. Disappointing data from major economies including China and Japan have also fanned worries about corporate earnings and factory output, with the Sino-U.S. trade battle clouding the outlook for world growth.

In currencies, sterling slumped below important chart support around $1.26 on May's delayed Brexit vote. With European Union refusing to renegotiate the deal lawmakers doubted her chances of winning big changes. EURUSD nudged up to $1.1365 after shedding 0.2 percent on Monday. USDJPY pair fell to 113.03.USD also gained broadly as the U.S. Federal Reserve stayed on its policy tightening path, although uncertainties over how much further the Fed can tighten have turned bullish dollar bets sour lately

In commodity markets Oil prices edged up on Tuesday in Asia after falling 3% in the previous session as a cut promised by Saudi Arabia and its allies in the enlarged OPEC+ failed to boost oil prices.

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