The British Pound plumbed depths below 1.20 after 21 Tory MPs deserted their colleagues and voted to hand control of the parliamentary agenda to the opposition. A delay to Brexit and a snap general election are now more likely. The Pound has bounced since, but is likely to face further pressure as forex traders assess Britain’s near future.
The news will add to negative momentum evident in overnight trading. Investors piled into bonds and gold as US data showed manufacturing contracted in August as the global trade dispute bit. Stocks ignored positive messaging from the White House. Despite President Trump’s tweet that the US is “doing very well in our negotiations with China” there is still no agreed date for a next meeting. IT, industrial, financial and communication sectors all slumped by 1% or more.
Asia Pacific futures are pointing to negative starts for regional indices ahead of the release of important China data. Caixin services and composite PMIs are expected to hold steady around 51.6. Traders may interpret any slip as further signs of dispute induced deterioration, and trading could turn febrile.
Australian GDP data is due later this morning. The components released this week so far have increased uncertainty, with a 0.6% increase in exports somewhat offsetting a 0.9% decline in inventories. While consensus for the second quarter is a lift of 0.5%, some analysts are calling for a negative print. This could startle investor, especially as the RBA held rates steady yesterday.