Summary:
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GBPUSD holds support around the $1.26 handle
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Brexit concerns hit UK car production
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Thomas Cook stock doubles from the lows
The pound is attempting to take the first tentative steps on the road to recovery as the currency seeks to recoup some of its recent losses. After falling back near its lowest level since January against the US dollar this morning buyers have stepped in to defend the $1.26 handle and there is scope for a near-term relief rally given how much bad news is already priced-in. The FTSE is also looking to regain lost ground with the index moving back above the 7200 handle after falling to a 2-week low during Wednesday’s session.
The GBPUSD is trying to form a near-term double bottom around the $1.26 mark. This level also coincides with the 78.6% fib of the larger impulse higher from the low seen at the turn of the year. Source: xStation
UK car production almost halves on Brexit concerns
There’s been a stark drop in UK car production according to the latest figures, with just 70,971 vehicles rolled out in April, which represents a 45% decline on the same month last year. Unsurprisingly Brexit is the chief culprit here, with car firms bringing forward annual stoppages that are usually scheduled during the summer holidays due to concerns surrounding the fallout from Brexit. While the March 31st deadline has since been extended until the end of October, the news provides an insight into some of the logistical challenges faced by firms due to the extended period of high uncertainty that the UK’s exit from the EU is causing.
Thomas Cook shares extend their recovery
There’s been further gains seen in shares of Thomas Cook, with the stock jumping another 9% this morning as the tour operator is enjoying a nice bounce after its recent declines. The company’s market cap has now more than doubled from a low of 8.40p made last week after the firm confirmed a first-half loss of £1.5B and warned of “further headwinds” going forward. The main concern for investors will be that the problems which caused a drop in the stock of more than 90% in the past year still remain in place with the mounting debt pile the biggest worry of them all. This recovery seems to be a case of an overly pessimistic market view being unwound, and for it to take hold and turn into a sustained move higher the firm will have to get a handle on its spiralling level of debt.
