Sterling Falls on Growing Brexit Woes


The British pound extended losses against peers amid growing fears over the future of the UK economy. Last week, the UK parliament approved Johnson's Withdrawal Agreement Bill with a majority of 124 votes. After the 31st of January 2020, the UK will enter an eleven-month transition period, where the EU and UK negotiate their future relationship. Market participants believe that the timetable is not enough for the two parties to reach a trade deal, which will raise risks to the UK economy. On the other hand, the Bank of England could adjust its monetary policy to suit the prevailing conditions. The monetary policy committee could lower interest rates or increase asset purchases to offset the downside risks to the economy. The GBPUSD plunged to a three-week low of $1.2904, the GBPJPY declined to 141.16, and the EURGBP logged a one-month high of 0.8592.


Major US stock-index futures raced higher, posting a new record high on fresh trade optimism. China declared that it would lower tariffs on a variety of US products. The announcement enhanced investors' positive sentiment. The Dow Jones Industrial Average futures rose to 28583, the S&P500 futures advanced to 3232, and Nasdaq futures soared to 8743.


The dollar index, which measures the greenback against a basket of major currencies, retreated from a two-week high of 97.82 to settle at 97.67, weighed down by soft US data. The Durable Goods Orders shrank by 2% in November, and the New Home Sales came in at 719 thousand missing estimates of 734 thousand.


Gold prices extended gains following weaker-than-expected US data. The price of a gold ounce surged to a seven-week high of $1492, the price of a silver ounce rose to $17.63, and palladium recovered to $1890.


Oil prices hovered near a three-month high awaiting fresh fundamental drivers. Oil benchmarks cheered the latest trade developments but with a limited rally. The West Texas Intermediate crude futures trimmed Friday's losses and rose to $60.75, and Brent futures inched higher to $66.60.

Major Economic Events

GMT Country Event Expectation Previous
21:30 US API Weekly Crude Oil Stock   4.7


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