UK 'gong show' sees traders tune in
FX Trader, Loonieviews.net
Summary: Foreign exchange markets are glued to the unfolding Brexit drama as Prime Minister May heads to Strasbourg for another meeting with European Commission President Juncker. The rise in GBPUSD has since turned lower on profit-taking, but the outlook remains volatile.
GBPUSD rallied from 1.2976 at the New York open to 1.3095 at 14:00 GMT on news that Prime Minister Theresa May is flying to Strasbourg to meet EU Commission President Jean-Claude Juncker. She is trying to finalise a Brexit deal, and traders bought sterling in case she succeeds. The rally is a tad questionable as 432 MPs voted against her January 15 plan, and it has not really changed. At best, May will be hoping to get an extension to Article 50, which in itself will be difficult. GBPUSD retreated from the peak on profit-taking.
The GBPUSD rally gave a small lift to the Antipodean currencies and the Canadian dollar. US economic data were not much of a factor; Retail Sales rose 0.2%, which was a tad better than the 0.0% expected, and Business Inventories rose 0.6%. The data didn’t do anything to challenge Federal Reserve chair Jerome Powell’s comment in Friday’s speech when he said: “nothing in the outlook [demands] an immediate policy response and particularly given muted inflation pressures, the Committee has adopted a patient, wait-and-see approach.”
Wall Street liked the Retail Sales data enough that opening losses in the Dow Jones Industrial Average were reversed. However, the index's 0.30% gain (as of 15:00 GMT) lags the 1.36% rally in the Nasdaq and 1.0% gain in the S&P 500.
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