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Pounds slides from five-month high on Brexit snag

 

MPs delay deal vote

The pound was under pressure from the outset on Monday morning after British MP’s delayed a vote on Boris Johnson’s Brexit deal by introducing an amendment to the Benn Act which would prevent an “accidental” no-deal exit from Europe. As a result PM Johnson is obliged to request a deadline extension past October 31, with rumours suggest end-January is the next stop. He reportedly sent an unsigned request for an extension to Europe.

The pound fell in Asian trading, snapping a four-day rising streak, though losses were limited to less than 1% as, even though a deal is likely, we are apparently closer to a deal than any time in the past three-plus years. GBP/USD is now down 0.55% at 1.2911 after reaching 1.2991 on Thursday, the highest since May 13. The 200-day moving average is now at 1.2716.

 

GBP/USD Daily Chart

Source: OANDA fxTrade

 

Equities drift higher

Aside from the GBP action, it was a mundane start to trading this week. In a common theme in recent days, US equity indices travelled in the opposite direction to the previous NY session, this time rising between 0.21% and 0.31% with no specific news drivers. The rest of the Asian equities followed suit, with the Japan225 index gaining 0.21%, despite weak exports numbers, the HongKong33 rose 0.55% while China shares out-performed with gains of 0.84%.

 

Japan exports down more than expected

Further evidence of the global slowdown came from Japan’s trade data for September. Exports fell 5.2% y/y, more than the -4.0% analysts had expected and the tenth straight month of contraction. Meanwhile, imports fell 1.8% y/y, which was better than the -2.8% forecast. As a result, the merchandise trade deficit was wider than expected, but still narrowed to ¥123.0 billion from ¥143.5 billion in August. That’s the smallest deficit in three months.

There was only a muted reaction to the data in USD/JPY, with the pair’s direction dictated more by a slight risk-on mood in the markets. The yen fell 0.06% versus the US dollar, bringing a three-day rising streak to an end. The pair is now at 108.49 and is consolidating below the 200-day moving average at 109.08.

 

USD/JPY Daily Chart

Source: OANDA fxTrade

 

A slow start on the calendar

German producer prices for September and a monthly Bundesbank report are the only items on the European calendar while the US calendar is devoid of data or events. Canada goes to the polls today with surveys suggesting it could be a close-run thing.

 

The full MarketPulse data calendar can be viewed at https://www.marketpulse.com/economic-events/

 

OANDA Senior Market Analyst Craig Erlam previews the week’s business and market news with Jazz FM Business Breakfast presenter Jonny Hart. This week they discuss the week’s Brexit developments ahead of the crucial vote in Parliament on Saturday, Chinese GDP figures and preview next week’s ECB meeting

 

Source: MarketPulse

 

 

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Andrew Robinson

A seasoned professional with more than 30 years’ experience in foreign exchange, interest rates and commodities, Andrew Robinson is a senior market analyst with OANDA, responsible for providing timely and relevant market commentary and live market analysis throughout the Asia-Pacific region. Having previously worked in Europe, since moving to Singapore he worked with several leading institutions including Bloomberg, Saxo Capital Markets and Informa Global Markets, proving FX strategies based on a combination of technical and fundamental analysis as well as market flow information. Andrew began his career as an FX dealer with NatWest and the Royal Bank of Scotland in the UK.

Andrew Robinson

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