Markets.com Logo
euEnglish
LoginSign Up

Pound slips to 6-month lows: Morning Note

Jun 18, 2019
4 min read
Table of Contents
  • 1. BoJo sees pound lose mojo , Aussie soft on RBA, equities steady ahead of Fed, Middle East tensions.
  • 2. Equities steady before Fed 
  • 3. Pound lacks mojo
  • 4. Aussie soft 
  • 5. Oil soft, gold up 
  • 6. Equities 
  • 7. On tap (GMT) 

BoJo sees pound lose mojo , Aussie soft on RBA, equities steady ahead of Fed, Middle East tensions.

Equities steady before Fed 

Equities remain cautious ahead of the start of the Federal Reserve meeting today. The S&P 500 and the Dow were pretty well flat yesterday, whilst the FTSE 100 notched a slight gain.  Asia has been mixed. Futures indicate European equities are trading on the flatline again. Equities are lacking direction and will wait for the Fed to get a steer.

Equities investors are likely to display caution with the Fed in view. They may be disappointed with what the Fed offers – realization of this may manifest in mild selling ahead of the meet.  We’ve got no signs of progress on trade and little sense the G20 will produce anything. And now we have building tensions in the Middle East.

The White House has ordered 1,000 US troops to the region, with fears of escalation rising. Tehran says it will breach uranium stockpile limits in days. The Iran nuclear deal looks dead. Markets may start pricing in risk of escalation. Whilst this is only a very small number of additional manpower, and is clearly designed to act as a warning to Tehran, troop build-ups only tend to lead in one direction.  

Pound lacks mojo

The pound is at its lowest in almost 6 months on heightened fears of a no-deal exit. Boris Johnson is the clear favourite to become the next PM – in fact it rather looks like he’s going to walk it. Currency markets display fear that he has said he is prepared to take Britain out on October 31st without a deal if needs be. More BoJo, less mojo. Whilst a crowded trade there is real slippage here with little to spark life into the pound. 

The calculus is simple – failure to take Britain out of the EU this year risks a General Election and wipe out at the polls at the hands of the Brexit Party, potentially handing Jeremy Corbyn the keys to Number 10. The EU says it won’t renegotiate (it may have to), MPs won’t accept the existing deal, and Parliament has limited scope to stop this train.  

Sterling is increasingly reflecting the no-deal risk. Cable was last hovering close to its lowest of the year at 1.2530, having dipped as low as 1.2510, its weakest since the start of January. 2018 lows around 1.2470 could be the next target on the downside. BoE this week may signal tightening bias and readiness to hike earlier than previously expected, but the pressure on the pound remains because of Brexit. The BoE should be minded to remain on the sidelines until Brexit is decided. 

Aussie soft 

Australia’s dollar is also soft and susceptible to a major downside breach after minutes from the last RBA meeting showed more cuts are coming. More likely than not we should get at least one more cut this year. 

The minutes said: ‘Given the amount of spare capacity in the labour market and the economy more broadly, members agreed that it was more likely than not that a further easing in monetary policy would be appropriate in the period ahead.’ This was extremely strong signal and suggests more cuts to come and soon. Excluding the Jan flash crash we are now testing multi-year lows, on the cusp of a move back to decade lows not seen since the height of the financial crisis. At 0.6830 the AUD/USD cross was testing major support – this could hold until we get further clarity from RBA governor Lowe on Thursday. 

Oil soft, gold up 

Oil has failed to catch any tailwinds from the Middle East tensions. Brent was below $61 again but remains clear of last week’s lows. WTI was holding $52. All looking very bearish and flaggy right now. Until we get a good dose of economic data this rut seems set to continue. 

Gold keeps cranking higher – the prospect of lower US yields and geopolitical tensions seem to be acting as a tailwind. Last at $1346 the big target for bulls is the 2018 peaks at $1365 and then the 2017 highs at $1375.

Equities 

Ashtead FY numbers are positive, with EBITDA at £2.11bn, a slight beat as revenues rose 19%. The medium term outlook looks confident. Despite fears of slowing growth in the US, management say they expect to continue to experience strong end markets in North America.

On tap (GMT) 

EUR – ECB President Draghi Speaks (08:00) 

EUR – German ZEW Economic Sentiment (09:00) 

EUR – CPI (09:00) 

USD – Building Permits (12:30) 

GBP – BoE Gov Carney Speaks (14:00) 

EUR – ECB President Draghi Speaks (14:00) 


Risk Warning: this article represents only the author’s views and is for reference only. It does not constitute investment advice or financial guidance, nor does it represent the stance of the Markets.com platform.When considering shares, indices, forex (foreign exchange) and commodities for trading and price predictions, remember that trading CFDs involves a significant degree of risk and could result in capital loss.Past performance is not indicative of any future results. This information is provided for informative purposes only and should not be construed to be investment advice. Trading cryptocurrency CFDs and spread bets is restricted for all UK retail clients. 

Written by
SHARE

Markets

  • Palladium - Cash

    chartpng

    --

    -0.07%
  • EUR/USD

    chartpng

    --

    0.05%
  • Cotton

    chartpng

    --

    0.25%
  • AUD/USD

    chartpng

    --

    -0.27%
  • Santander

    chartpng

    --

    -1.10%
  • Apple.svg

    Apple

    chartpng

    --

    -0.29%
  • easyJet

    chartpng

    --

    -1.59%
  • VIXX

    chartpng

    --

    -0.22%
  • Silver

    chartpng

    --

    -0.62%
Table of Contents
  • 1. BoJo sees pound lose mojo , Aussie soft on RBA, equities steady ahead of Fed, Middle East tensions.
  • 2. Equities steady before Fed 
  • 3. Pound lacks mojo
  • 4. Aussie soft 
  • 5. Oil soft, gold up 
  • 6. Equities 
  • 7. On tap (GMT) 

Related Articles

India's Russia Oil Trade & US Response: An In-Depth Analysis

This article discusses the controversial oil trade between India and Russia and how it is perceived by the United States, focusing on concerns from US officials regarding Russia's war funding in Ukraine.

Noah Lee|1 day ago
Canada employment data

Morning Note: Canada CPI in Focus; Dollar Rises; Nikkei Pauses

The Canadian dollar held steady against the U.S. dollar on Monday, supported by higher oil prices while investors awaited key inflation data.

Tommy Yap|1 day ago

Crypto news today: XRP price falls to $3.01, DOGE price hovers near $0.22

Crypto news today: in the ever-evolving world of cryptocurrency, market fluctuations are a daily occurrence, today's focus is on two prominent cryptocurrencies: XRP and Dogecoin (DOGE).

Frances Wang|2 days ago
Markets.com Logo
google playapp storeweb tradertradingView

Contact Us

support@markets.com +27 104470539

Markets

  • Forex
  • Shares
  • Commodities
  • Indices
  • Crypto
  • ETFs
  • Bonds

Trading

  • Trading Tools
  • Platform
  • Web Platform
  • App
  • TradingView
  • MT4
  • MT5
  • CFD Trading
  • CFD Asset List
  • Trading Info
  • Trading Conditions
  • Trading Hours
  • Trading Calculators
  • Economic Calendar

Learn

  • News
  • Trading Basics
  • Glossary
  • Webinars
  • Traders' Clinic
  • Education Centre

About

  • Why markets.com
  • Global Offering
  • Our Group
  • Careers
  • FAQs
  • Legal Pack
  • Safety Online
  • Complaints
  • Contact Support
  • Help Centre
  • Sitemap
  • Cookie Disclosure
  • Awards and Media

Promo

  • Gold Festival
  • Crypto Trading
  • marketsClub
  • Welcome Bonus
  • Loyal Bonus
  • Referral Bonus

Partnership

  • Affiliation
  • IB

Follow us on

  • Facebook
  • Twitter X
  • Instagram
  • Linkedin
  • Youtube
  • Threads
  • TikTok

Listed on

  • 2023 Best Trading Platform Middle East - International Business Magazine
  • 2023 Best Trading Conditions Broker - Forexing.com
  • 2023 Most Trusted Forex Broker - Forexing.com
  • 2023 Most Transparent Broker - AllForexBonus.com
  • 2024 Best Broker for Beginners, United Kingdom - Global Brands Magazine
  • 2024 Best MT4 & MT5 Trading Platform Europe  - Brands Review Magazine
  • 2024 Top Research and Education Resources Asia - Global Business and Finance Magazine
  • 2024 Leading CFD Broker Africa - Brands Review Magazine
  • 2024 Best Broker For Beginners LATAM - Global Business and Finance Magazine
  • 2024 Best Mobile Trading App MENA - Brands Review Magazine
  • 2024 Best Outstanding Value Brokerage MENA - Global Business and Finance Magazine
  • 2024 Best Broker for Customer Service MENA - Global Business and Finance Magazine
LegalLegal PackCookie DisclosureSafety Online

Payment
Methods

mastercardvisaskrillwire transferAOPAY
The markets.com/za/ site is operated by Markets South Africa (Pty) Ltd which is a regulated by the FSCA under license no. 46860 and licensed to operate as an Over The Counter Derivatives Provider (ODP) in terms of the Financial Markets Act no.19 of 2012. Markets South Africa (Pty) Ltd is located at BOUNDARY PLACE 18 RIVONIA ROAD, ILLOVO SANDTON, JOHANNESBURG, GAUTENG, 2196, South Africa. 

High Risk Investment Warning: Trading Foreign Exchange (Forex) and Contracts For Difference (CFDs) is highly speculative, carries a high level of risk and is not appropriate for every investor. You may sustain a loss of some or all of your invested capital, therefore, you should not speculate with capital that you cannot afford to lose. You should be aware of all the risks associated with trading on margin. Please read the full  Risk Disclosure Statement which gives you a more detailed explanation of the risks involved.

For privacy and data protection related complaints please contact us at privacy@markets.com. Please read our PRIVACY POLICY STATEMENT for more information on handling of personal data.

Markets.com operates through the following subsidiaries:

Safecap Investments Limited, which is regulated by the Cyprus Securities and Exchange Commission (“CySEC”) under license no. 092/08. Safecap is incorporated in the Republic of Cyprus under company number ΗΕ186196.

Markets International Limited is registered  in the Saint Vincent and The Grenadines (“SVG”) under the revised Laws of Saint Vincent and The Grenadines 2009, with registration number  27030 BC 2023.

Close
Close

set cookie

set cookie

We use cookies to do things like offer live chat support and show you content we think you’ll be interested in. If you’re happy with the use of cookies by markets.com, click accept.