Bitcoin prices are trading marginally higher on Wednesday, continuing to oscillate either side of $3,500.
The British pound is trading in a tight range on Wednesday after U.K. Prime Minister Theresa May’s Brexit deal was defeated in Parliament Tuesday and as lawmakers are debating a no-confidence motion against the government.
The U.K. government survived a no-confidence vote brought by Labour Party leader Jeremy Corbyn over its handling of Brexit on Wednesday. The decision by lawmakers, who voted 325 in support and 306 against the government, leaves the administration intact with Prime Minister Theresa May at the helm. Following the vote, the U.K. will return to the predefined Brexit timeline, giving the government until Jan. 21 to present an alternative Brexit deal after May's proposal was voted down in Parliament on Tuesday. The British pound in response briefly bounced higher but retraced its gains to stand little changed at $1.2861. The euro was slightly weaker against sterling, last buying £0.8866.
British members of Parliament are beginning to vote in a no-confidence motion against Prime Minister Theresa May's government that was brought by opposition leader Jeremy Corbyn. The vote is not expected to oust the government. The Conservative and pro-Brexit European Research Group, which was instrumental in bringing a leadership challenge against May in December that ultimately failed, said they would back the government. The Norther Irish Democratic Unionist Party is also expected to back the Tories. Should Parliament express it has no confidence in the government after all, and no other government can gain confidence within 14 days, a general election would have to be called. May earlier said when addressing Parliament that having a new general election would be the worst possible option. U.K. stocks and bonds were closed at the time the vote began, and the British pound was little changed at $1.2858.
Elaborating on a speech she delivered on Monday, Kansas City Fed President Esther George said the central bank's shrinking portfolio of bonds may be a "fair explanation" for what's driving stock-market volatility. "This idea that it was like paint drying, I didn't really embrace that," she told The Wall Street Journal in an interview. "You have to continually watch it." That said, George told the newspaper the Fed hasn't reached the conclusion it was necessary to change the pace of the bond roll-off. George reiterated to the newspaper that she now advocates for some patience before the Fed raises interest rates further.
Some analysts, like the chief of currency strategy at Morgan Stanley, are saying that the dollar rally – which started in early 2018 – has come to an end.
Based on the early price action and the current price at .7180, the direction of the AUD/USD the rest of the session will likely be determined by trader reaction to the Fibonacci level at .7153.
Gold prices moved higher on Wednesday ahead of the no confidence vote in the UK. While May is widely expected to remain the Prime Minister, there is no clear cut plan on how to move forward. UK core inflation came in stronger than expected but the headline remains soft due to declining petroleum prices. Medium term momentum has turned negative as the MACD (moving average convergence divergence) index generated a crossover sell signal.
Yahoo Finance’s Adam Shapiro, Julie Hyman, and Dan Roberts join Columbia Threadneedle Investments Senior Interest Rate & Currency Analyst Ed Al-Hussainy to discuss the U.S. and European market outlook after Brexit.