Home » Currency Note » Currency Note » Theresa May defeated again on Brexit

The day began with reports that Theresa May could lose the latest Brexit vote which caused the pound to weaken against the dollar to fall below the $1.28 mark – its lowest mark for one month. And so it proved, as the Prime Minister – who was not present in the House of Commons – was defeated by 303 votes to 258. It is another example of May losing control of her party in the final weeks before the UK is set to leave the EU.

In truth, the result of the vote could be considered symbolic rather than anything else. However, it has real ramifications: May will now find it very difficult to say that she has the backing of the Commons for her strategy, which serves to undermine her position even further. Second, the EU are unlikely to offer any real changes to what has already been agreed, as they will simply not believe that May can get anything through Parliament.

Meanwhile, Germany’s latest GDP growth rate figures showed the eurozone’s largest economy narrowly avoided a technical recession in the fourth quarter of 2018. In the third quarter, the economy shrank by 0.2% and if there are two consecutive quarters of contraction, it is a technical recession. As it was, the economy actually posted a figure of 0%. However, the reading will be of some concern to the eurozone, although some economists expect Germany to bounce back in the first half of 2019.

Retail sales in America surprisingly slid in December, which ruffled a few feathers on the currency markets and on Wall Street. It is possible that the recent government shutdown deterred Americans from spending lots, but then again, it could be evidence that the US economy is slowing. We will know more in the near future.

One thing we learned overnight is that Congress has approved a deal to prevent another government shutdown and Trump is going to sign it. However, he will also declare a national emergency to secure funding for a border wall which he assured the American public Mexico would pay for. It is believed that Democrats will make a legal challenge to his declaration and that this will be successful. Let us hope so – when you give someone like Trump unbridled power, who knows how he will use it.

Today we have retail sales from the UK, as well as December’s trade balance figures from the eurozone. Finally, in the US, we will see the industrial and manufacturing production figures for January. There will also be continued talk of last night’s Brexit vote and what it means for the negotiations moving forward. In the meantime, do make sure that you protect your budget against volatility. Speak to your Personal Trader on 020 7898 0541 to find out how a forward contract will let you protect your budget.

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