“Get Brexit done,” sounds everywhere in Britain. The process lasted for years, exhausting all participants. And even now, when Johnson is expected to win, and it will lead to Britain’s exit from the EU with a deal, the news that he may get a smaller majority than previously assumed, causes a decline in the pound. The British currency declined by 0.4% to $1.3108 following the publication of YouGov’s data that Boris Johnson’s party will win with a much smaller advantage than predicted 2 weeks ago.
The survey showed that nothing is defined, while the nervousness in the market is so high that it is hard to imagine how fierce the reaction of market participants will be if the election results will not meet expectations. However, from a broader perspective, the British pound rose by almost 10% from its lowest level recorded in September.
Currency markets are in such a tense state due to a number of high-risk events this week, including extremely important meetings of the Fed and ECB. In addition, the real economy is extremely vulnerable to the U.S. decision to impose additional tariffs on Chinese exports. The data show that Beijing is trying to convince Washington that the country has made enough concessions to conclude the first phase of the trade deal and prevent the escalation of the trade war. Chinese imports of U.S. soybeans increased 13 times over the period from September to November this year compared to the same period last year.
Futures on American and European stocks demonstrated insignificant changes, as now market participants are waiting for the facts as the key events approach. First of all, it is progress or lack of it on the first phase of the trade deal. Further, the decision on the interest rate at the end of the Fed meeting, as well as the statement of Jerome Powell. Further, on Thursday the markets are waiting for the ECB meeting and elections in Britain. By the end of the week, the market may experience a significant increase in volatility with the prospect of influencing all major currencies.
