Uncertainty Trails After US-China Preliminary Trade Pact, Focus Shifts to Sterling


As reported by Reuters, the December 15 deadline set by the United States for the signing of a preliminary pact was reached with both countries agreeing on some certain terms:

Highlights of the Preliminary Trade Deal
President Trump had already threatened to impose extra tariffs on more than $160 billion Chinese goods; this will not take effect consequently as a result of the new agreement.

China also put a stop immediately to the extra tariffs it had planned to impose on American cars.

The US will also slash the tariffs imposed on Chinese goods valued at $120 Billion by 50% reductions while other tariffs hold steady.

The quantity of U.S agricultural produce bought by China is still sparking up concerns as China made a fresh commitment to increasing this by $32 billion over 2 years but Trump is demanding $50 billion value of farm produce to be bought every year.

Market Reaction
Despite the preliminary trade pact been reached, it seemed as though enthusiasm had waned on the part of investors regarding riskier assets. Investors were not encouraged with the seemingly small tariffs to roll back as against that which was anticipated.

Although released economic stats from China had a good outlook, it still didn’t prop up inspiration.

On the Asian side, AUD traded slightly lower. Yen also stood marginally weaker in its currency pairs. Sterling remains supported after having a wild run following a conservative win at the last UK elections.

The British Pound in its USD, JPY, and EUR pairs held steady consolidating gains; analysts predict it may not trend higher.

A prediction of 1.3050 minor supports in GBP versus USD holds sway, while 142.47 support in GBP/Japanese Yen and 0.8508 resistance level in EUR/GBP. USD/JPY couldn’t breach the 109.72 resistance last week but hopes remain alive this week.

Focus Shifts to Sterling
Last week had been a memorable one for sterling as it ticked positive after the election results. This week will also project events that will impact sterling.

First, the bank of England monetary policy decision meeting in which analysts predict it may hold steady its stance on the interest rate. Also due to the UK is PMI figures, inflation numbers, retail sales, employment stats and GDP numbers which will impact the sterling.

Week’s Highlights
Due out also this week is US regional Fed surveys, GDP finalized figures and core PCE inflation numbers. PMI figures from Eurozone, German Ifo will be released.

Reserve Bank of Australia’s decisive meeting will impact the AUD.

Employment stats from Australia; GDP numbers from New Zealand will be impactful. CPI numbers from Canada and retail sales will impact the Loonie.

Bank of Japan meeting may also impact on the Yen.

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Azeez Mustapha

Azeez Mustapha is a trading professional, currency analyst, signals strategist, and funds manager with over ten years of experience within the financial field. As a blogger and finance author, he helps investors understand complex financial concepts, improve their investing skills, and learn how to manage their money.