Sunday , March 7 2021

The British pound bounces around because May's Brexit cabinet is at the center of the day.



On Wednesday, the British pound traded volatilely, as investors estimated the likelihood that U.K. Prime Minister Theresa May will be able to approve the draft Brexit agreement in the face of skepticism among its government members.

Pound

GBPUSD + 0.4395%

traded $ 1.3016 versus the dollar, which is 0.4% more than the second half. In the trading session earlier, the pound traded below USD 1.29.

May was able to meet with her colleague on Wednesday. If the May support of the government's ministers is to win, this month's summit could be invited to the European Union. The biggest test would be expected a week before Christmas when voting in parliament.

To read: Brexit's deal faces obstacles, because U.K. May have to be sold to the shared government

The vote in the House of Representatives will be the main obstacle to the deal, before Britain plans to leave the European Union in March.

"The prospect of this vote and the noises from the back tables should be a place where focus is concentrated outside of today's news, because it poses a risk" between the prospect of regular departure, innocent exit, or possibly a second referendum, said Adam Cole, the main currency's strategist RBC Capital Markets, note.

As for Stephen Gallo, the European BMX driver's FX strategy, he sees a high probability that the project will get approval on Wednesday, but any hack could get a pound lower.

"Our belief is medium and high, and if we fail, a quick move to the 1.25 / 1.26 zone could be in the store," he said.

Meanwhile, the ICE is the US dollar index

DXY + 0.04%

The US currency exchange measure against the six major competitors was almost unchanged at 97.01. The index slipped from session height to 97.41 after the government announced that consumer prices rose by 0.3% in October, ranking MarketWatch surveyed. The increase was the highest since January.

To read: Consumer inflation shows the highest leap in nine months for higher gas, hire, second-hand cars and PCI prices

The gold price slightly changed compared to the Japanese currency

USDJPY -0.08%

Buying 113.86 yen.

Future oil futures

CLZ8 + 1.90%

after a sharp second-generation sales increase, which accelerated oil spill as the goods last fall covered the market area, just over a month after trading with a price of nearly four years.

See: 5 reasons why oil prices are historic

The US dollar rose by 0.1% compared to its Canadian counterpart in oil products

USDCAD -0.0076%

for $ 1.3247. The US dollar is up 0.5% in November against the Canadian currency.

"So far, the impact on the Canadian dollar has been limited, but if oil prices continue to decline, the fall in the dollar / CAD will be very difficult," said Kathy Lien, FX Strategy Officer, BK Asset Management, in a note.

Lien said that by the end of the year, the US dollar is likely to remain strong, thanks to stable data, interest rate rises, stock market weakness, and tricks of Washington and other major trading partners.

"The only risk is the US data. This week we have consumer prices and retail scheduled release. Both of these reports have a direct impact on Fed policy and will set market confidence in Fed forecasts," Lien said.

See: MarketWatch Economy Calendar

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