Archive for Brexit

Pound Hangs On Brexit Politics

By Orbex

Brexit Cross-Party Talks To Accelerate

Theresa May is going to accelerate cross-party Brexit talks this week as MPs come back from a long Easter holiday break. The UK’s prime minister will step-up negotiations with Labour in a bid to strike a compromise as soon a possible.

Cabinet ministers presented a rosy picture when asked about the outcome of the discussions. However, in private, they confessed that Labour’s plan of a permanent customs union leaves the PM empty-handed.

Conservatives Running Out of Time Amid European Elections

The clock for May is ticking and she needs to act quickly before her party suffers a crushing defeat in the May European elections.

Labour is offering no incentive, and eurosceptics and the DUP are demanding changes that PM May isn’t willing to make. Because of this, a parliament-approved Brexit plan might have trouble coming to life before the October 31st deadline.

But May will need to receive all the help she can as her Conservative party faces a strong defeat in the EU elections, a poll shows.

Prime Minister Could Face New Leadership Challenge

In the likely scenario that May fails to persuade parliament to back her deal by May 22 – a day before the European elections commence – she could face a new leadership challenge.

Despite surviving a confidence vote that cannot be re-challenged until December, Conservative MPs and backbenchers are discussing the potential to remove her from Number 10 within a matter of few days.

In fact, it is not certain she will even have until May 22nd as Downing street requires a more pro-Brexit PM and fast.

Is There Hope For Pound?

The British pound fell below the $1.30 support last week. Although, in consolidation, prices have broken outside both the minor and major ascending channels. And this adds a bearish bias on sentiment. With GBPUSD remaining below $1.30, we expect short-term weakness to weigh the currency pair down. But the likelihood of retesting the former channel resistance also plays a part.

By Orbex

 

UK Earnings & Employment Data Remain Firm Despite Brexit Woes

By Orbex

Unemployment Rate Remains At Lows

Today, the Office for National Statistics released the latest UK earnings and employment data. It highlighted resilience in labor market conditions despite the ongoing uncertainty around Brexit. UK unemployment remained unchanged at 3.9% in the three months to February, the lowest reading since November 1974.

This was below the forecasted 4% and was driven by a 76.1% employment rate, which was higher than the 75.4% figure recorded a year earlier. This employment rate is now the joint-highest recorded figure. The economic activity rate came in at 20.7%, lower than the prior year’s 21.2% reading. This marked the joint-lowest recorded figure.

Wage Growth Remains Firm

Earnings data was also upbeat. Average weekly earnings (excluding bonuses) remained unchanged at 3.4%. This was in line with expectations. The figure including bonuses rose to 3.5%, again, in line with expectations.

This data makes for a frustrating reading for the Bank of England. It serves as even further evidence of economic strength in the UK. However, the current Brexit uncertainty means that the bank is unable to proceed with the tightening program which it has said is its preferred path.

Recent data has shown unemployment hitting its lowest levels since the 1970s. And wage growth is rising at its fastest pace in a decade. Meanwhile, inflation has recently risen again, unexpectedly.

At the BOE’s latest meeting, policymakers said that the “possibility of further cliff-edge uncertainties that could have a significant effect on [business] spending as any new deadline approached”.

The BOE stated that if Brexit can pass smoothly with a deal agreed in parliament, then further rate increases would likely be necessary. However, the bank also warned that if the UK does not reach an agreement and leaves without a deal, then an emergency rate cut could be warranted.

Ultimately, the BOE explained:

“The economic outlook will continue to depend significantly on the nature and timing of EU withdrawal.”

Brexit Deadline Extended to October

This is a strange time for UK politics. We should currently be approaching the first month of the UK being out of the EU considering the original March 29th exit date. However, following a temporary extension to April 12th and a subsequent request for a further extension, the UK is currently not due to leave the EU until October 31st.

While many have welcomed the extension with relief, we have not seen much movement in GBP. It remains very clear to traders that the political gridlock stopping a deal from happening has a long way to go before being resolved. As such, the market is closely monitoring headlines around Brexit. However, given the level of false hopes and false starts, it will now take something concrete to cause a significant shift in price action.

Technical Perspective

uk100

While news of a longer Brexit extension has not seen much upside action in GBP, UK equities have enjoyed a different reaction. The UK100 is now once again challenging 2019 highs around the 7479.3 level, having once again broken above the bearish trend line from last year’s highs. The UK is retaining access to the single market, for now, meaning there is no need for investors to move capital. And with the BOE on hold, for now, UK equities have the green light for higher prices. Above the 7479.3 level, the next resistance level to watch is the 7555.3 level. Any retracement lower from here should find support at the 7363.3 level.

By Orbex

 

Pound Is Happy About Brexit Delay

By Dmitriy Gurkovskiy, Chief Analyst at RoboForex

The Pound is growing against the USD early in another April week. Overall, the British currency looks pretty stable despite a great deal of news relating to the Brexit.

Last week, the United Kingdom agreed with the European Union on six more months for hammering out all details in the documents without the hustle and bustle and finally exiting the alliance. At first, London asked for a delay until June 30th, but the European Union, being sick and tired of all Brexit-related complications and hype, gave more time than the UK initially wanted.

At the same time, both parties agreed that any delay would have a solid reason to be reviewed and processed.

Despite more or less clear Brexit date, this topic remains rather controversial for global capital markets. Investors are afraid that all these delays (mostly due to British lords’ “holier-than-thou” attitude) may push the Brexit procedure in the direction that is completely different from where the British people wanted it in the first place.

Nevertheless, there is no guarantee that with six additional months the British Parliament will use them to find a perfect solution instead of rejecting new versions of the agreement with the European Union.

In the daily chart, the Pound is consolidating around 1.3125. Oscillator indicates that the downtrend may continue towards the downside border of the range at 1.2950. If later the price breaks this level, the pair may continue falling to reach 1.2750.

As we can see in the H4 chart, the price is moving sideways. There might be a divergence on MACD towards 1.2950.

Disclaimer

Any predictions contained herein are based on the authors’ particular opinion. This analysis shall not be treated as trading advice. RoboForex shall not be held liable for the results of the trades arising from relying upon trading recommendations and reviews contained herein.

Central banks fail to support equities as Brexit delay fail to boost Sterling

Article by ForexTime

Equity markets across Asia are trading in red on Thursday as investors digest the latest updates on the global economic outlook and central banks decisions. ECB Chief Mario Draghi reiterated that risks to the Eurozone economy remain to the downside as the central bank pledged to keep interest rates at current levels at least through to the end of 2019. Minutes from the Federal Reserve’s March monetary policy meeting showed no indication of a rate cut, but several officials noted that next move may be in either direction.

The boost provided to equity markets from the shift in central banks seems to be exhausted with the S&P 500 standing 1.7% away from an all-time high. Investors hoping for an interest rate cut may not see one coming any time soon, suggesting that they shouldn’t continue betting on monetary policy to push equities further.

Investors need to shift their attention to the earnings season which unofficially kicks off tomorrow. With the impact of tax cuts and government spending boosts from 2018 fading, it’s time to see how companies will perform when left on their own. Earnings are estimated to decline by 4.2% in the first quarter of 2019 according to FactSet. However, if 65-70% of corporates, as usual, managed to beat Wall Street estimates, we may still see a slight growth in earnings.

One of the critical metrics investors need to watch is profit margins, especially given the spike in wage growth in Q1. If companies are not able to pass the additional cost to consumers, it may indicate further weaknesses to come in the upcoming quarters.

Guidance is also going to be critical for the S&P 500’s next move. The index has risen 15.2% so far year-to-date, and for the rally to be sustained, investors need assurance that we’re not going to hit an earnings recession. A dovish Fed won’t be enough to keep the party on.

Brexit delay failed to boost Sterling

A second Brexit delay has been granted until October 31 with a review to be conducted on June 30. The good news is a no-deal Brexit has been averted for now; the bad news is no one knows what will happen next. So far, it seems that the can is just being kicked further down the road. This has led to a steep decline in the Pound’s implied volatility but has done little to lift the currency. That’s because the risks have just been extended and not vanished. Predicting Sterling’s next move is going to be a tough task as all options remain open, including a no-deal Brexit and no Brexit at all.

Disclaimer: The content in this article comprises personal opinions and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.


Forex-Time-LogoArticle by ForexTime

ForexTime Ltd (FXTM) is an award winning international online forex broker regulated by CySEC 185/12 www.forextime.com

Brexit delay: The pound will rally but business needs decision not more fudging

By George Prior

The pound will benefit from a relief rally – but little else has changed – as Theresa May is forced to concede a medium delay to Brexit, affirms the CEO of the world’s largest independent financial advisory organization.

The message from deVere Group’s Nigel Green comes as officials in Brussels say EU leaders have agreed a delay to Brexit to 31 October along with a review in June.

Mr Green says: “We can expect a relief rally of the pound, as investors digest the news that Brexit negotiations have longer to run, and the UK will not crash out of the EU on Friday, and the likelihood of a softer Brexit is significantly increased.

“A softer Brexit would be welcomed by businesses in the UK and those around the world that trade with Britain.

“Investors are advised to now be on the watch for this relief rally in Sterling, UK stocks, and also a mini spurt in economic activity in the UK, as delayed household and business spending takes place.”

“This medium extension period also makes a second referendum – a ‘confirmatory vote’ on any deal the Parliament finally agrees to – more likely, and with that a good chance of Brexit being voted down.

He continues: “In the meantime, this medium-length extension doesn’t change the fundamentals significantly. What businesses in the UK, the EU, and around the world that trade internationally need and want is decision, not further fudging.

“The best way to do this would be to put it back to the people in a second referendum.”

In March, the deVere CEO stated: “Allowing the public to vote and giving them a final say is quite simply the only credible solution now available.

“From inaccurate and often misleading campaigns to ineffective negotiations, the Brexit omnishambles has gone on long enough.

“Brexit will impact economic, security, diplomatic and foreign policy decisions for the UK for many decades.  After MPs have tried but failed, this issue is too important not to now be put back to the people.”

He stands by this position following the outcome of the emergency Brexit summit in Brussels.

Mr Green concludes: “All the continuing uncertainty makes it essential for those who are serious about safeguarding, creating and growing their wealth to ensure that their portfolios are properly diversified.  Diversification is the investor’s best weapon to mitigate risk and capitalise on the opportunities as they arise.”

About:

deVere Group is one of the world’s largest independent advisors of specialist global financial solutions to international, local mass affluent, and high-net-worth clients.  It has a network of more than 70 offices across the world, over 80,000 clients and $12bn under advisement.

GBP Traders Await EU’s Brexit Decision

By Orbex

GBP Traders Waiting For EU Decision on Brexit Extension

GBPUSD trading has become very stagnant over recent days as traders await the outcome of the current round of Brexit negotiations. The UK is due to leave the EU on Friday, though it now looks like the PM’s further extension request will be granted by the EU. Leaders are meeting today to discuss the situation.

May has asked for an extension until June, though the EU is reportedly considering offering a one-year extension. Such an outcome would likely be a big boost for GBPUSD which is still languishing at the bottom of the 1.30 – 1.33 range.

US CPI & FOMC Minutes in Focus

Over the European morning on Wednesday, the US Dollar continued its drift lower, posting a third consecutive day of red, as of writing. The USD index is now challenging the 96.57 with a very heavy tone to the day’s trading. Looking ahead to today’s US session, there is plenty of event risk.

Both the March CPI and March FOMC meeting minutes are due for release. CPI is expected to improve from last month’s reading, while the FOMC minutes are expected to pour further light on the current state of the US economy. So, we could have a mixed USD outcome from today’s data.

Test your strategy on how the USD will fare with Orbex – Open Your Account Now. 

EUR Higher on Weak USD

EURUSD continues to take advantage of a weaker USD. Despite ongoing concerns around the health of the eurozone economy, as well as the uncertainty from Brexit, EUR has risen against USD today, trading up to 1.1278 last.

Today, traders are waiting for the ECB’s April meeting which could see the bank introducing a tiered deposit scheme for banks while reaffirming its view of concern regarding the economy and the need for rates to stay on hold.

Better Risk Appetite Boosts Equities

Equities prices are trading a little higher today, following a pullback yesterday. USD weakness along with the prospect of Brexit being delayed by a year have boosted optimism once again, leading to better risk sentiment. SPX500 traded 2883.68 last, still well above the 2860.11 support level.

Safe Havens Mixed

Gold prices have continued their recent winning streak into a fifth consecutive day today as a weaker USD allows the recovery to continue. Price is now trading 1304.05, sitting just below yesterday’s session highs. A weak CPI print or further dovishness from the FOMC minutes tonight could provide the platform for a proper move higher in gold.

Despite the weaker USD, USDJPY traded a little higher though likely as a result of technical buying off the 111.10 level support. The FOMC minutes later will be key in determining which way price breaks from here.

Traders Await EIA Report

Oil prices, while still up on the week, saw a retracement lower yesterday as the weekly API report indicated a further build in US crude stocks. However, price has since recovered and is trading in the green again ahead of the weekly EIA report due later today. For now, price is sitting just under the 64.36 level resistance.

Commodity Currencies Still Mixed

The commodity currencies are mixed again today as, despite the continued rally in oil and weakness in USD, USDCAD rose again today. After testing the 1.3294 support yesterday and briefly piercing the level, buyers have stepped in to take price back up for now. AUDUSD, however, is higher today and is once again testing the .7147 resistance which, if broken, will put focus onto the .7237 level next.

By Orbex

 

Brexit Confusion Builds

By Orbex

If you’re feeling confused about the current Brexit landscape, you shouldn’t feel too bad. It appears that most leading UK politicians are equally as confused. As the UK continues to lurch towards the current April 12th Brexit deadline, there have been even more twists in the tale.

Following cross-party talks last week, May announced the prospect of a compromise with the Labour party in a bid to secure their support for a deal. May was supposed to hold a fourth parliamentary vote on her Brexit deal this week. However, she has ruled out such a move citing the current lack of support.

May To Compromise on Customs Union?

Such a compromise is said to involve the potential for remaining in an indefinite customs union with the EU following the official Brexit departure date. However, May has come under fierce opposition from members of her own cabinet who have deemed such a move as a “surrender” to Jeremy Corbyn.

Boris Johson Slams Customs Union Compromise

Commenting on the issue, Boris Johnson said:

“If the UK were to commit to remaining in the customs union, it would make a total and utter nonsense of the referendum result… To agree to be non-voting members of the EU, under the surrender proposed by Jeremy Corbyn– it cannot, must not and will not happen.”

As the PM continues to fight for a Brexit deal she has asked the EU for a further extension, to June 30th.Under the current structure, the UK is due to leave the EU on April 12th unless it can secure a deal. This would then see the UK depart on May 22nd.  May had initially requested June 30th, but EU leaders turned it down last month.

Tusk Suggests 12 Month “Flextension”

President of the European Council, Donald Tusk, has further muddied the waters. He suggested that the UK agree to a 12-month Brexit extension, which he coined a “flextension”.

Speaking on the back of hours of meetings last week, a senior EU official quoted Tusk as saying:

“The only reasonable way out would be a long but flexible extension…I  would call it a ‘flextension’… How would it work in practice? We could give the UK a yearlong extension, automatically terminated once the Withdrawal Agreement has been accepted and ratified by the House of Commons. And even if this were not possible, the UK would still have enough time to rethink its Brexit strategy. Short extension if possible and a long one if necessary. It seems to be a good scenario for both sides, as it gives the UK all the necessary flexibility while avoiding the need to meet every few weeks to further discuss Brexit extensions.”

EU Summit Due This Week

Members of May’s own cabinet have fiercely opposed such an extension. The PM is due to hold more cross-party talks with Corbyn this week. That being said, it seems that all options are viable. EU leaders are due to meet this week for a special summit. Following the summit, May will hear if they approved her June 30th extension request.

Technical Perspective

gbp usd

GBPUSD continues to trade within the bullish channel. This has framed price action since last year’s lows, recently finding support at yet another test of the 1.30 level.

gbpusd charts

On the lower timeframes, you can see the bearish trend line running from March highs which offers immediate resistance for GBPUSD. Bulls will need to see a break above this level to keep bullish momentum on track or risk a break below 1.30.

By Orbex

 

GBPUSD Analysis: Brexit talks are deadlocked

By IFCMarkets

Brexit talks are deadlocked

British Prime Minister Theresa May asked the European Union to delay Brexit until June 30, 2019. Will the GBPUSD fall? Such dynamics indicate the weakening of the British pound.

In accordance with the referendum held on June 23, 2016, the United Kingdom had to leave the European Union on March 29, 2019. However, after British Prime Minister Theresa May’s numerous requests, the European Union postponed Brexit until April 12 at the meeting held on March 21, 2019. Prior to this, the British Parliament has rejected the agreement on leaving the EU three times. Meanwhile, Brexit, without an approved mutual agreement, may cause the UK significant losses and have a negative impact on the exchange rate of the pound. The elections to the European Parliament will take place on May 23-26, and the EU leaders are not interested in the participation of the UK at all, which will soon leave the European Union one way or another. The chances of resolving Brexit problems before these elections are not too high. In turn, the date of June 30 will not allow to hold a new referendum in the UK, as there will be little time for its preparation. This week, data on industrial production and foreign trade in February, which may affect the pound exchange rate, will be published in the UK.

GBPUSD

On the daily timeframe, GBPUSD: D1 is trying to leave the triangle and move downward. Most technical analysis indicators formed sell signals. The price decrease is possible if Brexit turns out to be unfavorable for the UK.

  • The Parabolic Indicator gives a bearish signal.
  • The Bollinger bands have narrowed, which indicates low volatility. The upper band is titled down.
  • The RSI indicator is below 50. It has formed a negative divergence.
  • The MACD indicator gives a bearish signal.

The bearish momentum may develop in case GBPUSD falls below its last fractal low, the 200-day moving average line and the last fractal low at 1.297. This level may serve as an entry point. The initial stop loss may be placed above the two last fractal highs, the Parabolic signal and the upper Bollinger band at 1.327. After opening the pending order, we shall move the stop to the next fractal high following the Bollinger and Parabolic signals. Thus, we are changing the potential profit/loss to the breakeven point. More risk-averse traders may switch to the 4-hour chart after the trade and place there a stop loss moving it in the direction of the trade. If the price meets the stop level (1.327) without reaching the order (1.297), we recommend to close the position: the market sustains internal changes that were not taken into account.

Summary of technical analysis

Position Sell
Sell stop Below 1.297
Stop loss Above 1.327

Market Analysis provided by IFCMarkets

Brexit: Business will welcome cross-party leadership, but not an election

By George Prior

UK and global business will welcome Britain’s political leaders finally beginning to show leadership, affirms the CEO of one of the world’s largest independent financial advisory organizations.

Nigel Green, chief executive and founder of deVere Group, is speaking after Prime Minister Theresa May had “constructive” talks with opposition leader Jeremy Corbyn on Wednesday afternoon to end the deadlock over Brexit.   Further discussions between the two sides will take place over the coming days.

A spokesman for No 10 said both sides were “showing flexibility.”

The observation also comes as the House of Commons voted in favour of legislation which forces the UK government to request another extension to the Brexit process.

Mr Green comments: “Finally it appears that some cross-party leadership is being shown in an effort to end the impasse.  This must be and will be championed by businesses in the UK and those around the world that trade with Britain.

“It is a national disgrace that nine days to go until the fifth largest economy in the world is supposed to be leaving the world’s largest trading bloc and no-one still knows what’s going to happen.

“It must now be hoped that a consensus can be found, giving the roadmap more clarity for business.”

He continues: “Should this happen, the pound and UK assets can be expected to rally.

“The UK economy will benefit from a likely boost as household spending and investment that had been on the sidelines is unleashed.”

“Whilst this is not the Brexit some people want, it is now essential to foster unity and build back momentum in the economy to ensure long-term, sustainable economic growth.”

Mr Green goes on to add: “However, simultaneously, there are genuine concerns in business that Mrs May has also increased the possibility of a general election by proposing a cross-party Brexit deal, and this would have a negative impact on the pound and UK assets.”

The deVere CEO concludes: “All the continuing uncertainty makes it essential for those who are serious about safeguarding, creating and growing their wealth to ensure that their portfolios are properly diversified.  Diversification is the investor’s best weapon to mitigate risk and capitalise on the opportunities as they arise.”

About:

deVere Group is one of the world’s largest independent advisors of specialist global financial solutions to international, local mass affluent, and high-net-worth clients.  It has a network of more than 70 offices across the world, over 80,000 clients and $12bn under advisement.

Pound breathes sigh of relief as May seeks Brexit extension

Article by ForexTime

The British Pound roared back to life on Tuesday evening after Prime Minister Theresa May said she will be asking the EU for a “short” extension to the Article 50 process.

Buying sentiment towards Sterling was further supported by May’s offer to hold fresh talks with Labour. While the GBPUSD has scope to edge higher, it remains too early to come to any conclusions with investors waiting for further developments on this matter. Focusing on the technical picture, the GBPUSD has the potential to test 1.3210 if a daily close above 1.3100 is achieved.

Disclaimer: The content in this article comprises personal opinions and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.


Forex-Time-LogoArticle by ForexTime

ForexTime Ltd (FXTM) is an award winning international online forex broker regulated by CySEC 185/12 www.forextime.com