Pound, USD, and Euro Stay in Focus as Trade Talks Deadline, UK Elections Approach

Pound, USD, and Euro Stay in Focus as Trade Talks Deadline, UK Elections Approach

This incoming week is very crucial in the economic calendar. First is the upcoming UK election scheduled to hold on Thursday, December 12, 2019. Secondly, the December 15 deadline set by the US for the signing of a preliminary trade pact in which President Trump had threatened more tariff hikes on Chinese goods in case of a failed pact.

Investors are on edge as they await the outcome of the UK elections in which the majority of the polls had predicted conservatives win. Brexit, the exit of Britain from the European Union had made major headlines this year which had influenced the pound.

Also, the trade war between the two giant economies, the US and China had been a major headline story this year. The previous week, President Trump had announced that the trade deal may have to wait till 2020.

Central bank activity may also come to play as ECB, the Fed and Swiss bank will reveal the direction of recent monetary policies.

How This May Impact the Currency Market
US Dollar– This year, according to analysts, the greenback when weighed against a basket of ten major currencies had exceeded expectations. Though banks had predicted a bearish trend for the dollar this year, it had forged on against the winds.

On the optimistic view, analysts foresee a tariff reversal in the preliminary trade deal which will buoy the dollar and other riskier assets.

Given this, analysts propose that this may be a suitable time to give the dollar and other riskier assets a go while also storing safe-havens.

On the contrary, if events take a twist and a failed pact happens, it will prop the safe-havens, the Japanese Yen, Gold, and Swiss Francs. The pound and bonds market will also profit from this, with the dollar undermined.

Pound– All had not gone so well with British pound this year as it touched down a three year low in September 2019 while it rebounded slightly when hopes for Brexit were raised and an earlier election fixed. On the optimistic view, a Boris Johnson win and also a majority win in the parliament for the Conservatives will buoy the pound.

On the flip side, there had been a tinge of caution in view that the polls may not be accurate and also a conservatives win seemed shaky as the election approached.in this case, the safe havens will be buoyed.

The bonds markets had profited this year when the trade talks and the Brexit deal had purported the view of a global recession. The trepidation had negatively influenced the market, also with the manufacturing stats released, the fears of a global recession had heightened.

Euro– Central bank activity may prop up the Euro in the year 2020, because of ECB’s favorable economic outlook while analysts predict that the Fed’s move may undermine the dollar.

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Author : Azeez Mustapha

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Azeez Mustapha is an experienced author, trader, markets analyst, signals strategist, and funds-manager.