Presidential Deflections and UK Elections

Wednesday morning in the US saw the House of Representatives open its impeachment enquiry against Donald Trump. The main subject of the day was the ”investigations” he wanted Ukraine to pursue, which multiple top diplomats testified overhearing, during a phone call with President Volodymyr Zelenskiy of Ukraine. The basis of the call was for Ukraine to investigate Joe Biden and the Democrats whilst withholding military aid as leverage. Whilst Trump was “too busy with work” to keep track of the hearing, he did release a pre-recorded video saying “this is the single greatest scam in the history of American politics.” Since the phone call that took place in July, military aid has resumed and Trump has bolstered his team with two new advisors.

In news outside the impeachment hearing, Jerome Powell spoke to Congress and noted that the US economy is in a good place and as a result will be leaving interest rates on hold for now – a rebuttal of Donald Trump’s comments regarding interest rates. The greenback did show some short-term strength on the back of his comments but US-Sino trade talks continue to have an effect.  Yesterday’s trade issue being agriculture purchases which China refuse to disclose which just add to the trouble regarding Tariffs already – yet both parties are look to sign a ‘phase one deal’ as soon as possible.

UK

CPI Inflation figures came out lower than expected at 1.5% YoY, with uncertainty around the election and string of poor UK data likely being the main influencers. News from the election will continue to impact the markets and if inflation figures continue to slump it could signal for a rate cut. In terms of election news the Green Party has urged their party to stand down in the marginal seats in support of the Labour party with MEP Magid Magid stating ‘our top priority should be to stop the Tories by any means.’ Nigel Farage is yet to state whether or not he will vote Tory until he has seen the manifesto, testing whether Boris is a man of his word.

The gap between the two major parties is narrowing, reflected in the polls, meaning that any manoeuvring from the peripheral parties is critical. The markets are relatively stable now, but volatility will only grow as we get closer. This volatility will mean a sharp break in underlying prices for many businesses and with such uncertainty, volumes of hedging tools across the EU and UK are rising; though structured products (like Options) are not as expensive as they were pre-referendum.

At the time of writing:

GBPUSD - Trading above 1.28 at 1.2838

GBPEUR - Trading above 1.16 at 1.1655

EURUSD - Trading below 1.11 at 1.1015

The figures are based on the live mid-market rate, correct as of 09:00 GMT on 14/11/2019, and are provided for indicative purposes only. Live mid-market rates are not available to consumers and are for informational purposes only. The rates we quote for money transfer can be selected via the page on our website ‘Live Money Transfer rates’.

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