Review of the foreign exchange market on 30.11.2018

Again, Brexit has become the determining factor in the foreign exchange market. True, it only affected the pound. Theresa May commented on the situation with the upcoming vote in the British Parliament, as there are strong fears that the agreement will be blocked. In particular, she said that if the parliamentarians rejected the version of the agreement already approved by the European Union, there would be no other option. In this case, the UK will leave the European Union without any agreement. Also, when asked about the absence of any references to trade in the current version of the agreement, the Prime Minister said that negotiations on this issue continue and that, of course, it would be possible to keep duty-free trade but for this a number of European countries still need to be convinced. True, she did not specify which countries in question. But this reservation points out what they said immediately after the referendum, wherein there are quite a few countries in Europe who want to take advantage of the situation for their own purposes and try to limit the activities of British companies on the continent.

Let me remind you that the head of the Bank of England predicted disastrous consequences for the British economy in the absence of a trade agreement with Europe. So it is not surprising that after such revelations the pound immediately flew down. And even the growth in the number of approved mortgage applications from 65,726 to 67,086 did not prevent this. who want to take advantage of the situation for their own purposes and try to limit the activities of British companies on the continent. The purpose of such actions is to increase their own market share. Well, after these words of the Prime Minister, everyone immediately remembered that just a day before Mark Carney had spoken.

But with the euro everything is a little different, since the words of Theresa May confirmed the thought that the absence of any agreements on trade for Europe itself is very beneficial. American statistics also contributed, although personal incomes grew by 0.5% and expenses by 0.6%. The whole thing is in applications for unemployment benefits, as the number of primary has increased by 10 thousand and repeated ones by 50 thousand. Although the single European currency could have grown even more if it were not for the text of the minutes of the meeting of the Federal Commission on Open Market Operations. As expected, the Fed once again confirmed its plans to raise the refinancing rate in December and three more increases in the coming year. Although everyone already knows this, yet another confirmation and even officially, of course, gives optimism.

Today, all attention is only to preliminary data on inflation in Europe, on which a lot depends. The fact is that Mario Draghi, and other representatives of the European Central Bank, have lately been increasingly talking about all sorts of risks and other troubles. But officially, no one even stutters about the fate of the program of quantitative easing, the decision on which they were closing down was promised to be taken during the December meeting. It seems that the ECB is preparing the public for the next extension of the quantitative easing program, and if inflation slows down from 2.2% to 2.0%, then Mario Draghi will have quite a decent reason to break his promise to curtail the program. So it is worth waiting for the decline of the single European currency to 1.1325.

In the UK, they will continue to discuss Brexit and its consequences, but after only two days after officials have spoken so much of everything negative, it's worth waiting for some respite. What can support the pound, which has good chances to grow to 1.2800.