GBP/USD Price Forecast – GBP/USD Range Bound Near Monthly Lows Ahead of News Filled EU & US Trading Sessions
GBP/USD traders see their major pair struggling near 1.2740 after Tuesday’s trading saw the Cable slip from the 1.2800 handle as Brexit concerns rolled over into the next chapter with little fanfare after last weekend’s EU Brexit summit closed on positive and successful note. The current Brexit agreement was unanimously supported by the European Union last weekend, and despite the quiet victory for UK Prime Minister Theresa May, the broader market’s Brexit fears remain unchanged as Sterling investors now await the upcoming House of Commons vote on the current Brexit draft, slated for December 11th. As of writing this article, the GBPUSD pair is trading flat at 1.2750 p by 0.03% on the day. Investors are increasingly anxious ahead of UK’s Parliamentary vote as they are concerned that PM May lacks the support within her own parliament to get the current deal approved due to hardcore Brexiteers within her own Tory party vowing to vote down the proposal, a move that would see the UK heading straight into a no-deal hard-Brexit scenario.
Investors Await BOE’s EU Withdrawal Agreement Report & Fed Chair Powell’s Speech
Comments by the former defense secretary – Michael Fallon, saying that deal as the “worst of all worlds”, further cast doubts on the UK PM Theresa May’s ability to win a parliamentary approval, increase the probability for the UK leaving the EU without a deal. The already stronger greenback, supported by resurfacing US-China trade tensions, got an additional boost and climbed to near two-week tops following some hawkish comments by the Fed Vice Chair Richard Clarida, backing further rate hikes. Investors now await speech by Fed Chair Jerome Powell to affirm his stance on future rate hikes and a hawkish comment would increase bid surrounding US Greenback. On release front, attention now turns to the release of Bank of England’s (BoE) financial stability report (FSR) and stress tests result at 1630 GMT. Alongside, the central bank will also publish its analysis on the EU withdrawal agreement and the release will be followed by BOE Governor Mark Carney’s press conference at 1645 GMT.
The BOE assessment regarding the economy’s ability to weather a hard Brexit might infuse a fresh bout of volatility across the GBP pairs. Later during the early North-American session, the preliminary release (second estimate) of the US Q3 GDP growth figures and new home sales data followed by the Fed Chair Jerome Powell’s scheduled speech will influence the USD price dynamics and further assist market participants to grab some meaning trading opportunities. From a technical perspective, the risk remains tilted to the downside and a sustained weakness below monthly lows, around the 1.2725 horizontal zone, will add credence to the negative outlook. A subsequent breakthrough Oct. lows, around the 1.2700-1.2695 zone, will reaffirm a near-term bearish breakdown and accelerate the slide back towards challenging YTD lows, around the 1.2665-60 region. On the flip side, any recovery attempts beyond the 1.2765-70 horizontal resistance might now confront strong resistance near the 1.2800 handle, which if cleared might trigger a near-term short-covering bounce and lift the pair back towards the 1.2875-80 supply zone.
Dollar Flat After Fed’s Comments; Trump to Meet Xi This Week
The dollar was little changed on Wednesday even after Federal Reserve Vice Chair Richard Clarida backed further rate hikes. Meanwhile, U.S.-China trade relations were also in focus as U.S. President Donald Trump and his Chinese counterpart Xi Jinping are expected to meet over dinner Saturday evening in Buenos Aires to resume trade talks later this week.
The U.S. dollar index that tracks the greenback against a basket of other currencies last traded at 97.275 by 12:42 AM (05:42 GMT), down 0.01%.
Traders are likely to look the minutes from the US Federal Reserve meeting held on Nov. 7 – 8 that will be released later this week. Those minutes could provide some indication of how fast or slow the Fed plans to hike interest rates next year.
On Tuesday, Federal Reserve Vice Chair Richard Clarida backed further rate hikes, but added that the tightening path would be data dependent, as the Fed approaches a “neutral stance.”
“Clarida comments certainly hinged toward hawkishness…we expect the Fed to remain consistent and adjust monetary policy according to incoming economic data which has so far been pretty robust,” said Stephen Innes, head of trading, APAC, at Oanda.
“We are expecting the Fed to raise rates in December and 3 times in 2019.”
Meanwhile, U.S.-China trade relations returned to focus after National Economic Council Director Larry Kudlow said the White House was having “a lot of communication with the Chinese government at all levels” and that President Donald Trump thinks there is a “good possibility” the two countries could reach an agreement.
“We’re having now a lot of communication with the Chinese government at all levels,” Kudlow told reporters on Tuesday. “We were at a total standstill. Nothing was going on.”
Stock Market News
FTSE 100 set for hesitant recovery in 2019 amid Brexit crunch: Reuters poll
Britain’s top stock index will claw back some ground next year after a bruising 2018 but gains will be much more muted than originally expected, brokers, fund managers and analysts predicted in a Reuters poll on Wednesday.
Investors must navigate Britain’s formal exit from the European Union in March and some see a likelihood of a snap general election next year too, opening the possibility of a Labour government replacing the ruling Conservatives.
While the previous Reuters poll in August saw the FTSE 100 .FTSE almost reaching its May 2018 record high of over 7,900 by the end of next year, the Nov. 13-27 survey knocks 400 points off that estimate.
The median forecast of almost 30 respondents was for the FTSE 100 to end 2019 at 7,500 points. The index was expected to end this year at 7,185 points and reach 7,357 points by mid-2019.
Those results are in keeping with a progressive worsening of sentiment around Britain’s top stock index. In a survey taken six months ago, respondents had expected the FTSE 100 to hit 7,900 already by the middle of next year.
Respondents see the FTSE 100, which closed at about 7,016 on Tuesday, rising roughly 2 percent into the end of this year. However, this won’t be enough to turn around the rough ride of 2018 which delivered volatility shocks and growth worries as well as political uncertainty in the UK.
BREXIT CRUNCH LOOMS
Fears that Britain would fail to reach a Brexit deal with the EU have been eased by an agreement signed last Sunday. But these have been replaced by worries that the Westminster parliament will vote down the deal which Conservative Prime Minister Theresa May is describing as the “best possible”.
“The market is currently transfixed by whether the UK ends up with a ‘Deal Brexit’, ‘No Deal Brexit’, or even ‘No Brexit’ – each of these probabilities shifting with the newsflow. Beyond this though, the market will have to start thinking about the implications of a potential Labour government,” said Chi Chan, director of European equities at Hermes Investment Management.
Parliament votes on the Brexit deal on Dec. 11.
Auditor had questioned Nissan on payments to Ghosn at heart of scandal: source
Nissan Motor Co’s auditor had repeatedly questioned transactions at the heart of allegations of financial misconduct by former chief Carlos Ghosn but Nissan said they were proper, a person with direct knowledge of the matter said on Wednesday.
Ernst & Young ShinNihon LLC questioned Nissan’s management several times, chiefly around 2013, about purchases of overseas luxury homes for Ghosn’s personal use and of stock-appreciation rights that were conferred on him.
But the Japanese automaker said the transactions and financial reporting were appropriate, the source told Reuters on condition of anonymity.
The revelation shows Nissan and its auditor were discussing the transactions, in apparent contrast with Nissan’s contention that the alleged misreporting of benefits for Ghosn was masterminded by Ghosn and a key lieutenant.
A spokesman for EY ShinNihon, the Japanese affiliate of global accounting firm Ernst & Young, said he could not comment on specific cases. A Nissan spokesman declined to comment.
Ghosn was arrested on Nov. 19 as he arrived in Japan. Prosecutors accuse him of falsifying Nissan’s annual reports to understate by about half his total compensation of some 10 billion yen ($90 million) over several years.
Nasdaq to List Bitcoin Futures Next Year Say Suspect Bloomberg Sources (Again)
Bloomberg’s unnamed sources return a year later to claim that this time, the Nasdaq is pushing plans again to launch Bitcoin Futures in the new year.
In a recent article published by Bloomberg, two people ‘familiar with the matter’ have leaked that one of the world’s largest exchange companies is eager to launch Bitcoin futures in the new year despite this month’s devastating crypto market crash. According to an undisclosed source, the Nasdaq has allegedly been busy engaging with the United States Commodity Futures Trading Commission (CFTC) for approval of their new derivative product and is banking on “sustained interest” from the crypto trading community going into 2019. Bloomberg’s sources also commented that the new Nasdaq Bitcoin futures “will be based off the Bitcoin’s price on numerous spot exchanges, as compiled by VanEck Associates Corp”. Interestingly, neither Nasdaq officials, VanEck outside representatives nor a spokeswoman for the CTFC responded to comment on this matter.
This is not the first time that Bloomberg has reported on this supposed Nasdaq rumor, citing questionable sources. On November 29, 2017 the publication posted a very similar article stating that the Nasdaq was planning on listing their own Bitcoin Futures in Q2 of 2018 – ‘according to a person familiar with the matter’ – after the Chicago Mercantile Exchange (CME) and Chicago Board Options Exchange (CBOE) had launched the first Bitcoin futures in December 2017. However, following the catastrophic crypto market crash that ensued not long after the booming record highs we saw in January, the Nasdaq failed to deliver any such product.
This most recent version of the same rumor has now arrived only a week after the Intercontinental Exchange Inc (ICE) announced its revised decision to postpone the launch of its eagerly awaited Bakkt trading platform and physically-settled Bitcoin futures product until January 24, 2019. In the official medium post published on November 20, Bakkt CEO Kelly Loeffler announced that the platform was experiencing delays from the “Volume of interest…and work required to get all of the pieces in place”, which dealt a heavy blow to the already falling crypto market.
With market confidence now at a new all-year low and Bitcoin’s price stagnating below $3,800, there is every incentive to attempt to lure buyers back into this market with the promise of an explosive Q1 next year and new institutional investment.
However, in the absence of sufficient evidence to support the new claim we cannot know for certain if the Nasdaq is in fact planning on launching Bitcoin futures or whether this is a second attempt from Bloomberg to direct the crypto market.
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