Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 71% of retail investor accounts lose money when spread betting and/or trading CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money.

Relief rally as political and trade risks cleared

Exit polls suggested that Boris Johnson is leading the Conservative party to win a majority of seats in the UK general election.

The official exit poll predicted that the Tories will win 368 of the 650 seats in the House of Commons. A swiping victory will give the prime minister more power to negotiate a Brexit deal and put UK on track to leave the EU by the end of January 2020.

GBP/USD surged over 2.3% or 300 pips overnight, reaching its highest level seen since May 2018. The immediate resistance level seems to be found at 1.350 area.

Christine Lagarde spoke in the European Central Bank meeting as the new chair last night. She painted a slightly brighter economic outlook of the eurozone, while maintaining her predecessor Mario Draghi’s ultra-loose monetary policy. She said ‘the downside risks on the horizon are less pronounced’. This comment is largely in line with recent macroeconomic data observed, which suggests that the global cyclical slowdown will have alleviated and is set to bottom out by Q1 2020. EUR/USD strengthened by 0.38% following the ECB meeting and continued its upward trajectory.

President Trump approved a US-China trade deal to halt the 15 December trade tariffs, on the baseline that Beijing agreed to purchase more US farm goods. The terms have been agreed but the legal text has not yet been finalised. Looking ahead, the market will focus on the details of the phase-one deal and look into structural issues such as intellectual property protection, state subsidies and the opening up of the financial market.

Asian markets are set to open broadly higher, as investors wake up in the morning to many favourable news. Political risk surrounding the UK election and trade risks surrounding the tariff deadline have both been cleared for now. It seems the ‘Santa rally’ came in earlier this year.

GBP/USD chart

 


Disclaimer: CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.

Before you go…

Try a demo of our Spread Betting or CFD trading accounts on our innovative platform. Free of charge and risk-free with virtual capital starting from €10,000.

cmc-mobile-trading-app