Another day, another vote in Parliament
UK MPs will once again convene in Parliament on Wednesday for another series of Brexit votes, this time on a range of alternative options to that negotiated by Prime Minister Theresa May, who’s deal has been rejected twice in the Commons. The aim of today’s vote is to, almost two years to the day since article 50 was triggered, find out what exactly there is majority support for in Parliament, if anything.
While this is widely seen as being a humiliation for May, with Parliamentary process having been taken away from the government, it may work in her favour, with members of the ERG and other hard-line Brexiteers already indicating that they could support her in a third vote. Once again, sterling traders are unmoved though, potentially a sign that this is being viewed as a pointless exercise that won’t yield a real change in the process and may instead just edge us ever closer to May’s deal, albeit with further embarrassments along the way including a commitment to resign in order to get it over the line.
Gold rally held back by dollar and risk resistance
Gold is trading relatively flat early in the session on Wednesday, having pulled off its highs on Tuesday as risk appetite improved. There are a number of potential bullish factors in the pipeline for gold but there is proving to be fierce resistance in each of these cases.
With the dollar recovering from its lows and Friday’s sell-off not gathering momentum early this week, gold has lost some of its appeal. It continues to find resistance around $1,320 as dollar and equity market bulls put up a strong fight. Whether this can be sustained is another thing, with investors increasingly fearing recession and central banks looking increasingly accommodative.
Oil rally short-lived on poor momentum
Oil prices were given another lift on Tuesday, buoyed by an improvement in overall market risk appetite, although a rise in inventories – as reported by API – did take some of the spark out of the rally. Once again, we’re seeing the rally struggle to gather momentum as the very gradual rally runs into almost immediate resistance.
There is a serious lack of momentum in the oil rally which doesn’t make me feel particularly bullish at these levels. It’s understandable that traders are cautious right now, given the global economic outlook and record US output but prices are gradually rising which suggests there is a general feeling that output cuts will work and that the decline in US rigs since November will eventually take its toll.
