By a slim majority the May’s government survived a no-confidence vote called by the Labour Party’s Corbyn
Jeremy Corbyn dismissed a May’s proposal to join talks demanding to rule out a no-deal option before doing so
Stocks trade mixed along with the greenback, US House attempts to end the shutdown which has just entered its 26th day
Impasse drags on
The House of Commons voted 325 to 306 against a motion of no-confidence for the May’s government meaning she was granted confidence from a majority to continue working on a Brexit deal. Such the outcome was widely expected as the DUP declared to back Theresa May even as it voted against a May’s Brexit deal the day before. Shortly after the yesterday’s vote Theresa May immediately opened talks with rival political parties attempting to break the Brexit impasse. However, the Labour Party’s leader Jeremy Corbyn opposed to join these talks saying that Theresa May must rule out a no-deal option as a precondition for these discussions. Indeed, Corbyn did not take part in the talks on Brexit as May told to reporters thereafter adding that she was “disappointed” and suggesting that her door to Mr Corbyn remained open. What’s next? So, by surviving the yesterday’s vote Theresa May is now obliged to present a revamped version of her Brexit deal by Monday and then submit it to the same parliament. However, without more profound changes there are tiny odds a new agreement will be approved, so the impasse is set to keep on. Taking into account some remarks from European leaders being heard on Wednesday one may suppose that a base case scenario for now is a deal the Brexit deadline (a period for negotiations) beyond March 29, giving May more time to convince the House to back her deal (any version she will be able to work out with Brussels). Of course, an option to scrap Brexit at all is, at least in theory, on the table as well and the UK may do so without getting approval from EU members, as the European Court of Justice judged in December. In our eyes if the EU agrees to postpone the deadline beyond the summer in order to find a solution, it could be supportive of the British pound.
Technically the GBPUSD closed last week above the upper limit of the bearish channel giving some hope for buyers. From this standpoint we may assume that the price could visit the area nearby 1.33 in the coming weeks. Note that the pound was placed among three most undervalued G10 currencies in December. Source: xStation5
The US government shutdown entered its 26th day with no hope to terminate this stalemate any time soon. Admittedly, the House of Representatives passed the latest in a series of bills in order to end the partial shutdown but the measure is unlikely to be backed by the Republican-controlled Senate. According to Majority Leader Mitch McConnell Republicans will not vote on a bill unless Donald Trump supports it. This bill provides $12.1 billion and is aimed to reopen the nine shuttered federal departments as well as dozens of agencies through February 8. In turn, on Thursday the House plans to vote on legislation to reopen government agencies through February 28. It looks that we are still a long way off from resolving this impasse and nothing suggests that any solution will come before long. The US dollar is trading subtly higher this morning with slight losses against the Japanese yen. The USD is gaining the most against the New Zealand dollar (0.4%). Stocks in China have been trading in a positive territory during the session, but they have slipped below the flat line in recent minutes. The SP500 futures indicate a slightly negative opening on Wall Street (-0.3%).
Today we are again looking at the SP500 (US500) index as it is likely to fail to break the 50DMA, the strong technical resistance we reported at the beginning of this week. Therefore, it looks that the price could reverse soon and come back below 2600 points again. In the long-term further drops seem to be a base scenario. Source: xStation5
In the other news:
Australian home loans fell 0.9% MoM in November after rising 2.1% MoM in October
Fed’s Kashkari said he wanted to see wage growth and inflation before supporting subsequent rate hikes adding that the central bank had less room to cut rates when a downturn occurs
Over 170 UK business leaders joined a chorus calling for a second Brexit referendum, according to the Guardian