Asia Pacific Market Open – British Pound, Brexit, Theresa May, Trade Wars, S&P 500, AUD/USD
- British Pound[1] index suffers its worst performance since June 2016 as Brexit draft now in jeopardy
- Despite UK uncertainties, S&P 500[2] halts 5-day losing streak on reduced US China trade war fears
- Those may be in vain as 25% US tariffs on China still on the table, AUD/USD[3] risks turning lower
Check out our 4Q forecast for the British Pound in the DailyFX Trading Guides page[4]
After failing to make headway on UK Prime Minister Theresa May and her Brexit draft yesterday[5], the British Pound depreciated against its major counterparts by the most since the Brexit Referendum itself. Looking at an equally weighted Sterling basket below, it dropped about 1.85 percent which was the largest decline since June 2016.
GBP Index (Average Versus EUR, JPY, CAD and USD)
Chart Created in TradingView
Within 24 hours of her address outside of 10 Downing Street, various cabinet ministers resigned such as Brexit Secretary Dominic Raab. This stoked numerous uncertainties such as the Brexit draft not being able to be passed through parliament, Theresa May facing a no confidence vote and has increased the odds of a hard Brexit[6]. UK front-end government bond yields tumbled, signaling fading BoE rate hike bets.
The US Dollar[7] was quick to capitalize on the weakness in Sterling, but was left ultimately mixed against its other major counterparts. Despite the worrying news out of the UK, the pro-risk Australian and New Zealand Dollars outperformed.
