Pound Strengthens As May Wins Vote

Pound Strengthens As May Wins Vote


The British pound advanced against other major currencies as Prime Minister Theresa May won a "no-confidence" vote. May earned the support of 200 out of 317 conservative lawmakers. It was clear that her opposition got bigger and it will be hard to win the parliament approval on her Brexit deal. On the other hand, the European leaders reassured that this is the best deal that Britain could have. The GBPUSD rose 1.1% to $1.2623, and the GBPJPY added 1% to 142.97.


The dollar index which measures the greenback against a basket of major currencies retreated from a one-month high of 97.55, to settle 0.4% lower at 97.00. The improved risk sentiment enabled investors to flee safe haven and jump into riskier currencies. Moreover, the inflation numbers weighed slightly on the performance of the dollar. The November Consumer Price Index was at 0.0% versus an expectation of 0.1%. The USDCAD lost 0.3% to 1.3350, and the USDCHF fell from a high of 0.9966 to settle almost flat at 0.9934.


The euro advanced against the United States dollar ahead of a closely-watched monetary policy meeting by the European Central Bank. Moreover, the common currency found support on hopes that Italy lowered its deficit target to cope with the European Commission rules.  The ECB president Mario Draghi will hold a press conference after the meeting where investors will be looking for clues on whether the ECB will raise rates in the second half of 2019.


Gold edged slightly higher as the dollar weakened. The gold ounce rose 0.2% to $1245. Gold prices have been caught in a tight trading range between a support zone of $1240 and a resistance zone of $1250, awaiting further fundamentals to fuel investors' appetite to the precious metal. Meanwhile, the silver ounce gained 1.3% to $14.72, and Palladium climbed 1.5% to a new high of $1260.


Oil prices drifted lower despite a drop in US crude oil inventories. The Energy Information Administration reported that the weekly US crude inventories fell 1.208 million barrels last week. The West Texas Intermediate crude futures lost 1.5% to $51.17, and the Brent futures declined 0.5% to $60.21.

Major Economic Events

GMT Country Event Expectation Previous
Tentative EU EU Leaders Summit    
12:45 EU ECB Interest Rate Decision (Dec) 0.0% 0.0%
13:30 EU ECB Press Conference    
13:30 US Initial Jobless Claims 226 231
19:00 US Federal Budget Balance (Nov) -193.5 -100.0


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