News & Analysis

Pound sterling rallies after May wins abrupt confidence vote

Dec 12, 2018 | Market Updates

Upcoming high impact news:

11:30 AUD RBA bulletin
19:30 CHF Swiss National Bank Monetary Policy meeting
23:45 EUR Main Refinancing Rate

The U.K. government has given Australia a run for its money in leadership spills, after Theresa May was challenged by MPs in her conservative party overnight. Unlike Australian Prime Ministers, May came out on top, winning 63 per cent of votes in a confidence ballot. The abrupt vote resulted in extreme moves for the Pound Sterling, with the currency bouncing back from recent losses over Brexit concerns. At 0800 AEDT, the GBP/USD pair was at 1.2606, rising 122 pips in the session. It comes after the currency fell to 20-month lows against the USD. Against the Japanese Yen, the Pound surged around 125 pips.

In stocks, U.S. markets closed on a high as concerns over a trade deal between the U.S. and China started to ease. The Dow Jones rose 157 points or 0.64% while the S&P 500 gained 14 points. The tech-heavy Nasdaq closed 66 points higher. In an interview with Reuters, President Donald Trump said talks between Washington and Beijing were ongoing and confirmed he would not raise tariffs on Chinese imports until a deal was reached. U.K. and European markets also finished the session higher.

Despite a rise in global equities, Australian shares are expected to slump at the open. The SPI futures were 13-points lower at 0830 AEDT. In forex, the AUD is slowly starting to recover, now holding above 72.15 U.S. cents. Today the Reserve Bank of Australia will be releasing its quarterly bulletin, with detailed analysis of current and future economic conditions (from the bank’s view).

Later tonight, the European Central Bank (ECB) will also vote on its Main Refinancing Rate, which isn’t expected to move. The Swiss National Bank will also meet for it’s bi-annual interest rates meeting

Sources: CNBC & Bloomberg

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All times are AEDT

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