Foster’s Terror:
Yesterday’s Sterling market faced a headwind as investors realised they might have over stepped, in fact overpriced, the potential benefits of a post-Brexit trading arrangement at the European level. The value that markets have priced out during the course of yesterday and today reflect investors’ and traders’ concerns that getting a deal from the European Union is just the first hurdle; it’s got to float across the channel! The composition of the House of Commons at present is fragile. Without even considering the imposition and constraint that the upper House of Lords can place upon the legislative arm, the Conservative ‘majority’ and working alliance is weak at best. The DUP, headed up by Arlene Foster, holds a working agreement with the incumbent Conservative Party leadership in order to give PM May and the Cabinet command of the lower house. Ms Foster, however, has signalled that the Northern Irish party will not just roll over and play dead if its interests, and the interests of Northern Ireland, are not satisfactorily represented in the hypothetical deal. Crashing the Pound by 0.55% against the Euro and 0.4% against a similarly struggling Dollar. In Europe, regional growth (or rather a lack there of) is drawing back into focus. In the minutes from the ECB’s latest policy statement relenting growth was clearly within the monetary policy authority’s radar. A resolution of political risk in Turkey with the release of US pastor Andrew Brunson saw traders exhibit a classic “sell-the-news” fallout. With the Lira rallying to and past 6.0 to the Dollar in the past weeks amid speculation of the resolution, today’s confirmation counterintuitively saw the Lira lose value.
Since Market Open:
Discussion and Analysis by Charles Porter
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