News background and trading ideas for 13/12/2018

Dec 13, 2018

Yesterday Great Britain, that already became a habit, was a provider of sensations and turbulence in the foreign exchange market. The opposition was able to gather votes for a non-confidence vote for current Prime Minister Theresa May. We’ve already noted yesterday such scenario and written that it likely plays into May's hands rather than is a threat. It helps her since the inability to collect a necessary number of votes for taking a non-confidence vote means that in the coming year after that, May has an immunity for such procedures. Besides, she further demonstrates her authority and legitimacy, what is relevant in the light of last developments around the Brexit. Which is why on the news of the non-confidence vote the pound was increasing rather than decreasing. The vote outcome turned out, as we’ve noted, much predictable: May continues to be a PM of the UK.

Actually, yesterday's events in the British Parliament have changed little the existing alignment so far. May still has to find something that can be offered to Parliament so it will vote for the treaty between the EU and the UK, thus ensuring “soft” Brexit. We continue to follow the process, especially what is happening in Brussels and continue to recommend buying the pound since we believe in the successful completion of a saga called Brexit.

From other news of yesterday, it’s worth admitting the data on consumer inflation in the US (released within the framework of forecasts), so they could not provide specific support. Meanwhile, more and more analysts are inclined to believe that the year 2019 will be very tough for the dollar and expect its decline. Recall, we recommend selling the dollar in the foreign exchange market.

The central event of today is the announcement of the ECB decision on the parameters of the monetary policy. Considering that the Eurozone economy doesn’t enjoy, and France and Italy only add issues, as well as the fact of a temporary deadlock in Brexit, there is absolutely no reason for the ECB to change the vector of monetary policy and switch to aggressive rhetoric. So, we don’t demand anything new from the Central Bank today.

Otherwise, today presents no new revelations. But let’s see what will be further, only time will tell us.

Our trading ideas are still unchanged: buying the pound, the Canadian dollar, oil, and gold, as well as selling the dollar and the Russian ruble.