Pound higher amid no extraordinary Brexit events

Brexit headlines continued to fuel volatility in the pound on Monday as traders watched and waited.

Brexit headlines continued to fuel volatility in the pound on Monday as traders watched and waited. May was attempting to drum up backing for the Brexit deal, this time from business leaders, whilst disinters from her party attempted to draw together enough support for a leadership challenge. With insufficient letters submitted so far for a vote of no confidence, Theresa May is still clinging onto power.

Feeling some support from Michel Barnier and Theresa May’s lobbying, sterling edged higher across the morning, quickly reversing a knee-jerk dive sub $1.28. Theresa May’s comments that the Brexit transition period would end prior to the next general election in May 2022 sharply moved the pound. Whilst extending the transition period is an alternative, it is not one that Theresa May is looking to exercise. Yet despite the slip the pound recovered an was trading cautious 0.2% higher at the time of writing. 

Traders will continue to focus on Westminster, however Mark Carney appearing before the Treasury Select Committee tomorrow could provide a welcomed distraction. Views on the UK economy are expected along with a grilling over the central bank’s plans for a no deal Brexit.

House Builders Struggle On Lower House Prices
Despite a mildly stronger pound and a softer start on Wall Street, the FTSE pushed higher across the session. Housebuilders were noticeably trading against the trend following disappointing house price data. According to Rightmove, house prices across the UK fell 1.7% month on month in November and were down 0.2% year on year; the first annual decline in 7 years. Brexit uncertainty in addition to stretched buyer affordability is eating away at house prices, with the Christmas lull arriving earlier than usual. Barratt Developments traded 1% lower whilst Persimmon was off 0.5%.

Apple Heading Back To Bear Market Territory
The Dow fell on the open, led lower by Apple amid growing concerns over iPhone production orders. Semiconductor shares added pressure to the broader US market, whilst the Nasdaq dived over 1.8% 

Owing to weak demand, Apple has reportedly cut production orders on 3 models unveiled just recently in September. Given the importance of iPhone sales to Apple’s bottom line, investors are understandably nervous. Following Apple’s results and its decision to no longer give a product sales break down, investors have been wary of iPhone numbers. This latest development has confirmed investor fears. Shares in Apple sunk 3% in early trade, adding to 5% losses to the share price last week. Across this month alone Apple share price is off some 14% and is moves towards bear market levels, a 20% decline from its recent high that took the market cap to over $1trillion.
 


Join our live webinars for the latest analysis and trading ideas. Register now

GAIN Capital UK Limited (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.