Daily Analysis - 10/07/2018
Key ministers in UK Prime Minister Theresa May’s cabinet resigned yesterday as they disagreed with her plans to keep close trade ties with the European Union after Britain leaves the European Union. Foreign Secretary Boris Johnson and Brexit minister David Davis both quit their posts on Monday. Will this cast doubt over the Brexit process going forward?
GBPUSD plummeted 160 pips after the news of Boris Johnson’s resignation, touching a low of 1.3187 and has since bounced higher to recover half of the down move. Markets seem to remain calm as concerns of Theresa May being ousted are low for now and she looks likely to survive a no-confidence vote should there be one.
USDJPY rises above the key 111-yen level as demand for safe havens ease as market sentiment is positive today. Trade tensions between the US and China seem to have taken a back seat for now as focus turns to US stock markets and earnings season. Asian markets ended up while European equities opened positive.
USDTRY jumped higher as the Turkish lira weakened on news that Turkish President Erdogan named his son-in-law as finance minister. On Monday, Erdogan was sworn in with vastly expanded powers after he won the recent elections again. He pledged to play a bigger role in monetary policy. The appointment of his son-in-law Berat Albayrak fueled investor unease and stoked worries about the independence of the central bank, as Erdogan is against high interest rates.
