It’s not a minute to midnight just yet
This week is another pivotal week in the Brexit process and this time it’s House of Commons Speaker John Bercow that’s thrown a spanner in the works. The third vote on Theresa May’s deal that was meant to take place this week may now not happen after he ruled against a vote happening on the same deal, something that may frustrate everyone from the PM herself to EU leaders hoping an agreement may be ready for sign-off later this week and even MPs that voted against it on previous attempts on the assumption that they’d have another shot further down the road.
While I don’t think this is a deal breaker and a workaround will be found, it does potentially push the vote back to next week, after the EU Council meeting and days before exit day. Surely no one is surprised at this going right down to the wire at this stage. What this would do is give the EU one last chance to sway Parliament and give May something (slightly) different to put to the House. It also leaves MPs with no more time for a vote, which means we’ll finally see what they really think of the deal after months of bashing it, with a long extension the only other real alternative and therefore, possibly, no Brexit at all. Sterling traders remain very relaxed, comforted by last week’s vote against no deal and therefore assured that the only real options on the table range from a soft(ish) Brexit and no Brexit at all.
Patience key as oil prices edge higher
Oil prices are creeping higher once again today as we await more inventory data from API later in the session. Despite the best efforts of OPEC+, in particular Saudi Arabia, oil prices are rising at a snail’s pace, which may necessitate the need for more extensions to the output cut agreement. Naturally the role of the US in all of this is significant, not to mention the timing of the global slowdown, but producers are confident that inventories will eventually shrink which in turn will lift prices. US output appearing to stabilise may also help.
Oil (WTI and Brent) Daily Chart
Ultimately, there’s nothing to stop the trend this year of very gradual gains in prices of Brent and WTI, with corrective moves along the way. Attempts to stabilise the market are proving less effective by the increasing influence of the US as a producer and exporter, not to mention the impact of its sanctions on Iran and Venezuela, which means we may have to be more patient than we’ve been in the past.
Gold looks soft despite trading in the green for third day
Gold is inching higher this morning but once again, it’s struggling to gather any real momentum which suggests more downside lies ahead near-term. The yellow metal has been on a very positive trajectory over the last six months as central banks have become notably more dovish around the globe and the dollar has hit a ceiling. With the global economic outlook a cause for concern, the environment looks very favourable for gold, a traditional safe haven.
Gold Daily Chart
That doesn’t mean we can’t see some near-term weakness though following a very good run. We’ve seen a small corrective move over the last month but there’s plenty of room for some more downside. Key support remains around $1,280, where we hit a low earlier this month and back in January, with a break below here bringing $1,250-$1,260 area into focus.
For a look at all of today’s economic events, check out our economic calendar.