Directionless UK markets highlight ongoing Brexit uncertainty

Joshua Mahony MSTA Scope Markets

The FTSE 100 is back in the green, yet the uncertainty seen throughout the past week looks set to continue as we head into yet another round of votes in parliament. Meanwhile, the European Parliament has rejected calls for trade talks with the US, risking further weakness in Germany

FTSE remains in consolidation mode amid Brexit uncertainty
Brexit farce continues, as we head into another round of votes
European parliament rejects US-EU trade talks

The FTSE 100 remains stuck in a state of indecision, with the phase of uninspiring consolidation continuing to dominate amid ongoing mixed messages in the Brexit debacle. The pound has been the true gauge of market sentiment, and if today’s GBPUSD trade is anything to go by, markets are as confused as the rest of us. Another day, another vote, with parliament likely to back a motion to extend article 50. However, before we even get to see parliament vote, the day has been full of oddities, with Tory Brexiteers calling for a potential vote of no confidence, the ‘people’s vote’ rejecting a people’s vote, Bercow rejecting one of the most popular amendments, and suggestions that Theresa May
could offer her resignation to help win votes in a third meaningful vote.

It hasn’t been a good week for trade hopes, with the European Parliament rejecting the call for renewed trade talks with the US. The breakdown in global trade was always likely to dent growth prospects for the likes of Germany and China, given that they have been the biggest benefactors of global trade. However, it looks as if the slowdown in Germany will continue for some time yet, as EU relations with the US remain strained. Much like the post-Brexit tariffs on finished cars, it is the automotive sector which is severely at risk throughout this process. While the euro may not have lost much ground off the back of these recent announcements, the economic picture in the eurozone is likely
to continue floundering until we see some form of breakthrough in EU and Chinese trade talks with the US.

Author

Joshua Mahony MSTA

Scope Markets

Joshua Mahony is Chief Markets Analyst at Scope Markets. Joshua has a particular focus on macro-economics and technical analysis, built up over his 11 years of experience as a market analyst across three brokers.

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