A whirlwind week of politics and currency craziness

  • Brexit continues to dominate UK headlines and currency
  • Euro also on shaky ground
  • US Dollar stronger on political sentiment

By the Halo Financial Team

What a week it’s been for world politics! And events are still unfolding… Let’s take a look at where we’ve got to, so far – and what’s coming next.

Brexit continues to dominate UK headlines and currency

We are now into the second day of five days’ debating the Brexit deal agreement in the UK Parliament in the run up to the 11th December vote on the agreement, which has already been approved by the European Union, but has to pass through British Parliament before Brexit can happen.

Meanwhile, yesterday, a landmark decision came in the form of a contempt motion. UK Prime Minister, Theresa May, must now publish the full legal advice she received on the Brexit deal, after British Member of Parliament (MPs) voted 311 to 293 that ministers were holding UK Parliament in contempt by not publishing the full facts, which, they argued, is needed in order to be able to make informed decisions on the Brexit agreement ready for the crucial final vote on 11th December. The Contempt Vote caused the Pound to drop to its lowest level for a year and a half in an initial shock reaction. More political pummelling is really the last thing the Pound needs.

Euro also on shaky ground

Things aren’t looking too rosy in Europe, either, as the Italian budget controversy continues to undermine the Euro. And, of course, there’s Brexit to consider, too… Add to that disappointing economic data, and there’s not much to support the Euro against its major currency partners.

US Dollar stronger on political sentiment

The US Dollar has strengthened against the Pound and Euro after faltering under continued trade tensions and negative sentiment from the chairman of the US central bank, the Federal Reserve. News that the US and China could be closer to cooperation on trade following the G20 meetings has help improve US market sentiment, and that, along with negative news for the Pound and Euro, has helped buoy the USD.

Australian Dollar fails to benefit from Chinese data

In Asia Pacific, surprisingly strong economic results from China have boosted the currencies closely tied to Chinese trade, although the Australian Dollar – usually vulnerable to or likely to benefit from Chinese data, given their close exporting relationship – was hit by a considerable drop in Australia’s economic growth. The result was a shock, knocking the Australian Dollar and causing further concern for Australia’s central bank, which is even less likely to increase interest rates now. This disappointing news came just after the Australian Dollar had strengthened slightly after the Reserve Bank of Australia’s (RBA) interest rate decision remained the same, but the accompanying statement was positive, saying that there were signs the Australian economy was improving.

New Zealand’s business and economic confidence appears to be on more of an even keel, although the Kiwi, too, is heavily susceptible to the ripple effects from political and economic developments across the globe. The importance of export markets remains a cause of uncertainty and therefore volatility for the New Zealand currency.

So, a bit of a bumpy ride Down Under…

G20 outlook rosier than usual

The G20 meetings over the weekend of 1st and 2nd December appeared productive and positive – which makes a refreshing change! US-Chinese tensions appeared to thaw somewhat, which is a good thing for world trade and the currency markets. Watch this space…

Continued uncertainty means currency volatility

For the most part, political events will continue to drive each of these key currencies and will overshadow the majority of economic announcements – the coming week will certainly provide plenty of currency volatility. Get in touch to discuss how all this could affect you and your foreign exchange plans.

All you need is positivity…

In some good news (for a change!) a store in London is selling Christmas gifts for refugees. Choose Love is a pop up shop in London’s Soho, created by UK charity, Help Refugees, and Glimpse, a creative collective. The pop up, which opened on Black Friday and will stay open until New Year’s Eve, offers the opportunity for shoppers to purchase items to help refugees at each stage of their journey: from practical items like gloves and hats, to items to spread a little joy and entertain, such as arts and crafts materials for refugee children. Heart-warming and highly commendable. 

Hope you’re having a good week and we’ll keep you updated on developments. Do get in touch if we can help with anything.

Brexit jokes

Q: With Britain leaving the EU how much space was created?
A: Exactly 1GB

“Brexit will make prices go up in Britain, so it will cost them twice as much to not go to the dentist.” – Conan O’Brien’s ‘Brexitbot’

Have we tried unplugging 2016 waiting ten seconds and plugging it back in?

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