4th September 2019
The pound hit its lowest level since the 1980s on Tuesday morning, as traders sold sterling ahead of a crucial Brexit showdown in Parliament. It surged back in the afternoon, after a dramatic defection by Conservative MP Philip Lee to the Liberal Democrats reduced the government’s majority to zero. A sharp fall as London markets opened brought the pound crashing through the $1.20 barrier, hitting a low of $1.1959 at around half past eight. If the ‘flash crash’ outliers produced by trading errors in October 2016 are disregarded, sterling hit its weakest level against the dollar since early 1985, according to data from Bloomberg.
Late in the evening, MPs voted to seize control of the Commons agenda in an effort to block a no-deal Brexit and force the Prime Minister to ask the EU for an extension. In response Mr Johnson said he would table a motion for an early election. MPs have been successful in their bid to take control of the Parliamentary timetable, in an effort to block a no-deal Brexit, by 328-301. Prime Minister Boris Johnson says he will table a motion for a general election.
MPs will seek to pass a law which would require the Prime Minister to ask the EU for a delay, pushing the Brexit date of October 31 back to January 31. Johnson, in response, says he will seek to call an election, most likely to be held in the week of October 14. He has already announced plans to suspend Parliament for a month, beginning next week.
Traders braced for wild swings in sterling as analysts warned that the currency is vulnerable to more pain. Moves on options markets signalled investors are bracing for the most volatile two months for the currency since the EU referendum.
‘MUCH TOUGHER!’
U.S. President Donald Trump seems to be trying to goad China into doing a trade deal before the presidential election in November 2020. On Twitter, he suggested that negotiations will become trickier if he wins a second term. “Think what happens to China when I win,” Trump said in a tweet on Tuesday. “Deal would get MUCH TOUGHER!” Trump also said that the U.S. is “doing very well in our negotiations with China,” without offering any specifics. Officials have been struggling to agree on the schedule for a planned meeting this month after Washington rejected Beijing’s request to delay tariffs that took effect over the weekend, according to people familiar with the discussions.
FTSE 100 Trading Signals, Forecast and Prediction
As the week continues to move around on the political front the FTSE 100 is still hovering around the 7300 level. Neither bulls nor bears really got going yesterday as traders wait and see how this all plays out. Looks like there will be a GE now, on 14th October. For today the 2 hour chart has gone bearish and is showing initial resistance at the 7308 level, but we also have R1 and the key fib at 7320 just above this. We also have the top of the 20 day Raff channel at 7325, so as such I think that we may see an initial stutter here this morning, especially if cable starts to rise again. If the bull were to break above this then we may well still see a rise towards the 7400 level as we have the daily coral at 7374 as well as the next resistance above the 7325 area.
If the bears do go for it from the 7320 level then we may well drop down towards the 200ema on the 30min chart at 7233. We also have S1 and fib support here so it would look to be a decent bounce point. Again though we need to be a bit cautious and watch cable and Westminster closely today.
The S&P pushed on yesterday, finally pulling away from the 2900 level after a lacklustre start. Still looking at a rise toward the 2950 level on that as we have the daily coral at 2953 for now.
For the FTSE I am looking at 7255 and 7230 areas for support and 7320 and 7375 as resistance for today.
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