The E.U. is expected to sign the Brexit deal on coming Sunday while Theresa May thinks she can lose the only deal she has.
Theresa May has declared a premature victory on Brexit yesterday. According to her statement, the deal is within reach. These comments pushed the Sterling higher yesterday and it almost touched the 1.30 mark against the dollar. However, traders have started to factor in the reality; if we take politicians at their words, it is literally impossible for her to get it passed in the Parliament. She has also admitted this herself by saying that I may lose the vote at the end. May has made it clear that the current deal is the only deal that she can secure. This brings back the focus on the earlier situation; "No Deal" or "No Brexit".
All eyes will remain on Brexit, the EU is gathering on Sunday and the officials are expected to sign the draft for the agreed Brexit deal. But remember under the current deal, Spain is highly likely to say no to the current deal. So the scenarios of no deal Brexit or no Brexit at all aren’t off the table yet.
Spain has made it clear that the country holds its interest first and it isn’t going to accept the deal in its current format. The country can clearly see how the issues around Gibraltar have been undermined. Spains's Secretary of State for the EU called the latest draft “almost nocturnal and treacherous"
Nonetheless, one thing is for sure; if Brexit reaches a smooth completion, the Bank of England is going to come out of the gates really fast. The bank is likely to increase the interest rates much faster and this would push the Sterling higher. The bank can normalise the interest rates either by holding more meetings and increasing the interest rate in each of these meetings or it can just increase the interest rate by 50 basis points rather than 25 bases points. Obviously, when you are increasing the interest rates by 50 points you are catching up with the economy much faster and it will not require more meetings.
Over in Asia, Chinese markets are on track to report losses for the third week in a row. Of course, there is nothing novel behind this momentum. Qualms around sluggish Chinese growth, never-ending dialogues around trade war are behind the current move. On top of this, there are some grave concerns that the upcoming G20 meeting will tater the relation further between the US and China. Investors are expected to remain on their toes.
Traders over in Europe are picking up the momentum from China and we expect the trading volume to remain sanguine because of the Black Friday. European markets closed lower yesterday and Brexit was the main story.
In cryptocurrency markets, it looks like, Bitcoin is likely to move even lower after a failed attempt to break above the 4700 level. The regulatory environment is suffocating the bulls and the bears are going wild. It is likely that the price may touch the level of 3800 or even 3500 if the current momentum continues. The most worrying aspect is that Ethereum could fall below the 100-mark and the honest truth behind that is because a large number of bogus coins have been flushed out of the system and this has made Ethereum less valuable. An interesting fact is that the price of Ripple's XRP is still holding on to its gains and this is really shocking because the actual use cases of Ripple's XRP are in no comparison to that Bitcoin or Ethereum.