UK Cabinet Backs Brexit Deal

UK Cabinet Backs Brexit Deal


The British pound strengthened against the United States Dollar as the hopes of a Brexit deal improved investors risk appetite. The UK Cabinet approved Theresa May's draft Brexit plan as expected. However, the challenges of winning parliamentary approval capped the gains. The GBPUSD rose to a one-week high of $1.3073. Market participants ignored the weaker-than-expected Consumer Price Index and focused on the Brexit headlines.


The dollar index which measures the greenback against a basket of major currencies traded at a low of 96.77 during the Asian session. The optimism of a Brexit deal is allowing investors to flee safety.  On the other hand, the October CPI YoY was at 2.1% versus an expectation of 2.2%. The USDJPY fell to a one-week low of 113.30, and the USDCHF traded at a low of 1.0040.


Major US indices extended their losses and closed sharply lower, dragged down by the drop in the technology sector. The Dow Jones Industrial Average futures lost 1.1% to 25079, the S&P500 futures fell lost 1% to 2702, and the Nasdaq futures dropped 1.2% to 6782.


Metal prices appreciated as the dollar dropped along with US Treasury yields. The gold ounce spiked to a one-week high of $1216, and the silver ounce bounced-off the lows to trade at a high of $14.19.


Oil prices ended a multi-day losing streak despite the buildup in US inventories. The American Petroleum Institute reported that the weekly oil stock rose by 8.790 million barrels last week. Oil prices were trading higher during the day as the huge drop on Tuesday attracted buyers. The West Texas Intermediate futures traded at a high of $67.60, and the Brent futures traded at a high of $57.34. The Energy Information Administration will report the official inventory numbers later today.

Major Economic Events

GMT Country Event Expectation Previous
9:30 UK Retail Sales (MoM) (Oct) 0.2% -0.8%
13:30 US Core Retail Sales (MoM) (Oct) 0.5% -0.1%
16:00 US Crude Oil Inventories 3.182 5.783
16:30 US Fed Chair Powell Speaks     


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