MORNING CALL: May's Government Under Trouble


Theresa May has another major obstacle in her way before she goes out and sells her deal. The equity traders are watching this closely 



Theresa May has suffered another major loss in getting more odds on her side. Her attempt to sell her Brexit deal to sceptical lawmakers was thrashed before it saw the daylight because opposition party won an emergency debate on whether  Theresa May’s government is in contempt of parliament for not producing the legal advice about her legal advice.
 
 
These tensions are going to get worse and traders are keeping a close eye on the UK’s economy, equity market and of course the currency. Mark Carney, the governor of the Bank of England will be speaking later and it is highly likely the governor may reinforce the bank’s view of Brexit. The bank clearly sees some strong headwinds for the country and the economic data is supporting their case. It has been reported that the UK’s economy could shrink as much as over 9 percent in the next 15 years.
 
In the midst of this, there is no surprise to see that the UK’s equity market has suffered some serious loses year to date. The FTSE 100 is down nearly 8.7% so far this year and it can suffer even more losses coming on the 11th December when the Parliament will vote on the current deal which is highly expected to be rejected.
 
 
 
Looking at the daily chart of the FTSE100, one thing becomes clear, the market is consolidating and the overall trend is skewed to the downside. The FTSE price has challenged the 50-day moving average but it has failed to break this to the upside. The RSI is showing some positive momentum but only as long as it stays above the upward trend line.


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