Daily Brexit update: More nails in the coffin

The government faces more days like Wednesday in the weeks and months ahead

Daily Brexit update: More nails in the coffin

No doubt, Theresa May’s government faces more days like Wednesday in the weeks and months ahead, as Parliament flexes its muscles. A vote demanding that Downing St release a plan within three working days of the defeat of its Withdrawal Bill on 15th January, went 308-297 against the government. Initially, the government had indicated a 21-day limit. A day before, the government lost another vote, requiring it to seek direct parliamentary approval to leave the EU without a deal if it wishes to use certain powers around raising taxes. Prospects of the big vote in about a week passing already looked slim. So, whilst talk of an eventual win by the government with another version of the bill down the line continues to echo, this week’s defeats seal the probable fate of the current Brexit bill more tightly.

How this affects our Brexit Top 10 markets:

GBP/USD: Cable flirts with its most critical nearby resistance near $1.28. It’s the region of a 31st December rejection that was followed by a sharp downdraft that bottomed at $1.243. A clear break could pave the way to $1.30s, though probabilities look sketchy given the massive risk event ahead. $1.2724 support is increasingly corroborated.

GBP/JPY: Sterling also makes progress vs. the yen. The doji forming on the charts is a problem though, and the rate has yet to get near Tuesday’s ¥139.42 reversal high.

EUR/USD: The euro continues to be bothered by weak economic data from Germany and France, but the dollar faces deeper opposition right now. Consequently, the euro has cleared long-standing $1.144 resistance. Last at $1.1538, it’s aiming for 16th October’s $1.1621 swing high.  

EUR/GBP: Alongside sterling, the market acknowledges that very recent soft Eurozone data is still being priced into the euro. Still, basic resistance around 90p is intact.

UK 100: The benchmark rallies with European markets and Wall Street on hopes of a trade deal.

Germany 30: Whilst indices slipped to lows after Washington’s statements following the conclusion of second-tier talks with China, major European markets closed above late reaction lows. Wall Street indices remain firm too.

Lloyds: Lloyds shares inched up 0.2%, taking the gain from late December lows above 10%.

Barclays: Barclays shares first lower close of the year saw a 0.3% retreat. The stock is also up about 10% from late-December doldrums.

Shell: Despite resilient oil, Shell looks to be struggling, closing below the prior day’s highs for a third consecutive day.

BP: BP rose quite in line with the FTSE’s +0.8%, rising 0.6%.

Build your confidence risk free
Join our live webinars for the latest analysis and trading ideas. Register now

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.