MarketPulse | Feb 11, 2019 11:18
It's shaping up to be another big week for the US, with the government on the verge of another shutdown and trade talks continuing with China.
This week the US team will travel to Beijing for what is increasingly looking like deal-saving negotiations. An acknowledgement from Trump that no meeting is planned with Xi later this month has been widely taken as a signal that a deal is unlikely to be achieved, with best hopes now being that enough progress is made to warrant an extension to the deadline and avoid further tariffs. An agreement was always going to be very difficult within the 90 day period so if an extension is agreed on the back of promising progress then it's still encouraging.
It's the negotiations at home where Trump appears to be making the least progress, as Democrats refuse to back down on funding for the border wall. With the blame for the previous shutdown having been levied at the President, the Democrats will likely feel comfortable seeing this through. Trump has been very good at the PR side of politics previously but this may be a challenge too far.
The pound finds itself back in negative territory this morning following a raft of poor economic data, which comes as the country prepares to exit the European Union. The uncertainty caused by the exit – more specifically, the lack of a deal – has quite clearly taken its toll. Unlike the last couple of years, the rest of the world around the UK is also going through a challenging period and so there’s nothing to paper over the cracks.
Growth in the final quarter was very soft, bringing the annual rate of GDP to only 1.3%. This includes a dreadful December, when the economy contracted by 0.4% from a month earlier. Despite this, the UK is not yet facing recession like Italy or the possibility of one like Germany. The first quarter could be weak again though and business investment – which contracted by 3.7% year on year in Q4 – is likely going to be a big contributor to this.
It’s another big week for the UK, with another Brexit vote in Parliament later in the week – albeit not on Theresa May’s deal which is still being negotiated in Brussels. This will likely leave us with a series of indicative votes on various amendments, including further attempts to delay exit day, among other things. There’s also a lot more data to come this week as well as another appearance from BoE Governor Mark Carney on Tuesday.
The pound is off around 0.4% against the dollar but this is partly being driven by the greenback itself which continues to be well supported in the face of struggling negotiations with China. Gold’s rally is continuing to stall on the back of the dollar’s resurgence although we are seeing some strong resilience, with the yellow metal holding above $1,300 having not really properly tested it yet.
Disclaimer: This article is for general information purposes only. It is not investment advice, an inducement to trade, 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. Ensure you fully understand all of the risks involved and seek independent advice if necessary. Losses can exceed investment.
Written By: MarketPulse
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.