CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 77% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 77% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 77% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

GBPUSD back near pre-election levels

10:43 2 January 2020

Summary:

  • Strong gains seen in European indices

  • UK Manufacturing PMI remains weak

  • GBPUSD and EURGBP back at pre-election levels 

 

European equities have made a bright start to the New Year with sizable rallies of more than 1% seen in several of the major benchmarks across the continent. 2019 was a good year on the whole for stock markets and they seem to be wasting little time in attempting to push higher again with the bourses following the lead of their Asian peers which gained overnight. Expectations that a “Phase One” trade deal between the US and China will be signed in less than 2 weeks have boosted sentiment but the main driving force appears to be the announcement of a further easing of monetary policy from China’s central bank.

The Eurostoxx 50 has rallied by more than 1.5% to trade within 10 points of last year’s high while the FTSE 100 here in London has added almost 60 points to move back above the 7600 handle. Source: xStation         

 

Manufacturing PMI survey remains bleak 

The release of a widely followed survey on the UK manufacturing sector has delivered a rather downbeat assessment, with the December PMI reading of 47.5 the 2nd lowest in 7 ½ years. Another sub 50 reading means it is now 8 consecutive months in contractionary territory for this indicator with output, new orders and new export orders all falling sharply. Economic growth last year looks likely to be the worst in almost a decade and while the Conservatives landslide election victory has raised hopes of better times ahead, there is yet to be any real evidence of a pick-up. 

The UK PMI reading for Manufacturing in December is close to its lowest level in 7 ½ years and continues to demonstrate weakness in the sector. Source; IHS Markit/CIPS

 

2020 vision for GBP remains elusive 

A Brexit uncertainty index from the Bank of England’s Decision Makers’ Panel has fallen to a six-month low, but this is obviously coming on the back of elevated levels in the second half of 2019. The pound pushed firmly higher into the end of last year, but the outlook ahead continues to be clouded with the currency’s fate in the next 12 months set to remain largely determined by Brexit developments. Against the US dollar and Euro the pound is trading not far from where it was on the day of the election and while good cases can be made for a significant appreciation or depreciation from the current levels, the clouded outlook is causing a lack of clear consensus or trend for the time being and it is not too surprising that market participants are awaiting further information before committing to high conviction positions.   

Since the UK election last month, GBPUSD has moved higher and fallen lower and now trades little changed to where it was on polling day. Source: xStation

This content has been created by X-Trade Brokers Dom Maklerski S.A. This service is provided by X-Trade Brokers Dom Maklerski S.A. (X-Trade Brokers Brokerage House joint-stock company), with its registered office in Warsaw, at Ogrodowa 58, 00-876 Warsaw, Poland, entered in the register of entrepreneurs of the National Court Register (Krajowy Rejestr Sądowy) conducted by District Court for the Capital City of Warsaw, XII Commercial Division of the National Court Register under KRS number 0000217580, REGON number 015803782 and Tax Identification Number (NIP) 527-24-43-955, with the fully paid up share capital in the amount of PLN 5.869.181,75. X-Trade Brokers Dom Maklerski S.A. conducts brokerage activities on the basis of the license granted by Polish Securities and Exchange Commission on 8th November 2005 No. DDM-M-4021-57-1/2005 and is supervised by Polish Supervision Authority.

Back