March 28, 2024

Brexit: Towards a softer plan? > Forex Highlights

LQDFX Forex news Blog: Potential Chaotic Brexit causes concerns among investors

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Dominic Raab becomes new Brexit secretary after unexpected David Davis resigns. Britain’s top Brexit negotiator has resigned from May’s cabinet objecting to UK Prime Minister’s vision for the country’s “softer” exit.

Davis’ resignation comes two days after the government agreed a new softer Brexit plan providing that EU and UK will keep close trade ties. He is Eurosceptic and a high-profile supporter of the Leave campaign.

The United Kingdom will exit European Union in nine months. However, the terms of its exit or the framework for a new trade deal with the rest EU members are still under negotiations.

The European commission, through its chief spokesman, said that the resignation of David Davis would not affect the Brexit talks.

The sterling gained as investors hope that Brexit would be softer following Davis ’resignation. The main stock market in London opened higher.

China Tariffs on US goods take effect

According to Reuters, Chinese ports have started clearing US goods on Monday, as new tariffs on U.S. imports have gone into effect. USA-China trade war got real on Friday as the two economic giants announced the imposition of tariffs against each other.

China claimed the US is triggering “the biggest trade war in economic history.” China’s commerce ministry called the U.S. actions “a violation of world trade rules”. Trump administration invokes that they want to put pressure on China to abandon unfair practices, such as intellectual property theft.

Both countries have also issued a second batch of proposed duties on $16 billion of each other’s goods.

START TRADING

CURRENCY MARKETS following trade war beginning and new Brexit barrier

The dollar dropped following the launch of the US-China trade war. The dollar index dropped 0.2% against his six major traded rivals to its lowest since June 14 following US wage indicator data.

The Australian dollar, a liquid proxy to China-related trades, rose 0.7%.

The Japanese yen, usually a safe-haven currency during times of economic and political instability, traded flat against the dollar, after losing 0.2 percent on Friday.

The Sterling rallied on Monday, rising 0.3% against the Euro. This rally may seem awkward following May’s trouble upon David’s resignation as he opposed to a “softer” Brexit approach.

The Euro rose 0.3% to its strongest since June 14, mainly supported by the greenback’s fall. The euro is enjoying a boost from higher risk appetite as investors bought riskier assets following favorable U.S. jobs data last week.

Oil prices rose due to higher demand and US sanctions against Iran.

Sources: Reuters, CNN money, the guardian

PLEASE NOTE The information above is not investment advice.