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May and the GBP Survive for Now. Up Next, Brussels…

By:
Bob Mason
Published: Dec 13, 2018, 04:11 UTC

It's a big day for Europe, with the ECB Press Conference to drive the EUR and Theresa May's last ditch efforts in Brussels to influence the GBP.

May and the GBP Survive for Now. Up Next, Brussels…

Earlier in the Day:

Economic data released through the Asian session was limited to the UK’s RICS House Price Balance numbers for November, weaker numbers brushed aside, leaving sentiment towards U.S – China trade talks to provide direction through the session ahead of the ECB’s monetary policy decision and press conference later in the day.

A mixed back through the Asian session saw the Japanese Yen pullback against the U.S Dollar, down 0.14% to ¥113.45, with the Kiwi Dollar down 0.03% to $0.6855, while the Aussie Dollar recovered from losses earlier in the day, up 0.11% to $0.7228.

In the Asian equity markets it was risk on, coming off the back of gains in the U.S markets overnight, supporting gains across the Asian equity majors, with the CSI300 and Hang Seng leading the way, the pair up 1.94% and by 1.43% respectively at the time of writing.

The Day Ahead:

For the EUR, economic data scheduled for release through the day is limited to finalized November inflation figures out of France and Germany. Barring any material deviation from prelim numbers, the stats are unlikely to have an impact on the EUR, with focus being on the ECB monetary policy decision and the all-important Draghi press conference.

With the markets fully expecting the ECB to announce an end to the asset purchasing program, it’s all about the forward guidance and when the ECB expects to make a move on rates.

The ECB’s economic forecasts will also be due out and, with the economy showing some sluggishness, it’s unlikely to be a particularly hawkish press conference, the ECB’s hands likely to be tied on the rates front near-term, with downward growth forecasts anticipated.

At the time of writing, the EUR was up 0.02% to $1.1371, with the ECB press conference the key driver today.

For the Pound, it’s another big day for Theresa May and the Brexiteers, with focus shifting from parliament to Brussels as the British PM looks to garner amendments to a Brexit deal that had ultimately led to Wednesday’s vote of no confidence.

With Theresa May winning by 200 to 117 and the Tory Party leadership now safe from a challenge for the next 12-months, the British PM will look to an unyielding EU to make amendments in a bid to salvage a deal and avoid a ‘no-deal’ departure from the EU.

While the EU has stated that there would be no renegotiation, Wednesday’s Conservative Party vote will have given EU leaders a taste of what’s to come should the deal remain in its current form, though this time there’s unlikely to be a Theresa May victory, or so it is assumed.

At the time of writing, the Pound down 0.06% to $1.2621, with Theresa May’s progress in Brussels the key driver today.

Across the Pond, economic data is limited to the weekly jobless claims and import and export price index numbers for November. Barring a material rise in the initial jobless claims, the stats are unlikely to have a material impact on the Dollar, with focus remaining on U.S – China trade talks and talk of a government shutdown.

At the time of writing, the Dollar Spot Index was up 0.03% to 97.072.

For the Loonie, economic data scheduled for release later today is limited to October’s New House Price Index figures, which will have a limited influence on the Loonie, with crude oil prices and sentiment towards supply and demand continuing to be the key driver.

The Loonie was down 0.06% to C$1.3358 against the U.S Dollar at the time of writing, with the lower than expected drawdown in crude oil inventories, according to the weekly EIA report, weighing early on.

About the Author

Bob Masonauthor

With over 20 years of experience in the finance industry, Bob has been managing regional teams across Europe and Asia and focusing on analytics across both corporate and financial institutions. Currently he is covering developments relating to the financial markets, including currencies, commodities, alternative asset classes, and global equities.

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