What Amendments to keep an eye on for the GBP?

Hi guys, good morning. It's Tuesday, 29th of January, just gone half 8 here in London. I'll start by having a quick look over how we finished yesterday in the markets, what happened overnight, stories driving the market, and then we'll talk about the main event, or what should be the main event for today, with the voting of the amendments. So that will, will come shortly. Just having a quick look over how we, or how we've come to where we're trading now in the markets. You can see my bottom right chart was really the, the main mover yesterday for, well, definitely for commodity prices. Oil having quite a big down day, stopping on quite a key technical level. We, we found support not long ago on the 17th of Jan and was also, well, the third test of a trend line. And the bounce we've had since then has been, been, well, really, really strong. However, the previous low that we had yesterday has offered a good level of resistance The market's pricing this in as, um, due to sort of the subdued risk sentiment. And also there was a reopening of a Libyan port as well. So this is one of the reasons sort of, uh, talked about for, for a while oil came down. And really was a strong day. Just having a quick look back at that chart, you can see trading $53.50 and above to begin with, all the way down to $51.29 or just a bit above that. Let's call that 51.34 for that low. So big day, uh, yesterday for oil, slight recovery, and, and that would as usual weigh on equities slightly. However, the main, uh, sort of talking point going into the afternoon session as oil was also going down was the earnings from Caterpillar. So just putting that into picture now, you can see Well, one of the most striking things there, fell 9.13%, losing, uh, $12.49 per share, missing, uh, disappointing earnings, uh, there as well, citing the, the China slowdown, uh, as well. And this had a, uh, an impact on all US equity markets. You can see if I just change the middle 3 here, you've got the, the Dow Jones on the left, which you can see really until uh, sort of half 5 was coming down quite strongly there. Obviously they're making a new low for the week. And the NASDAQ the same, and S&P, you guessed it, the same. Before a slight recovery into the back end of the session as oil also did. So, so just a reminder of how good that correlation can be. We'll have a look at the calendar in a moment. Obviously good week for earnings. I feel, you know, while maybe the first few weeks of January have been slightly quiet in, in some respects. It does feel like it's about to jump to life today, even though yesterday was a relatively quiet day in the markets. It was really move-wise all about oil and the NASDAQ. The oil moved lower, unsurprisingly. You also had the Canadian dollar weaken, so I'm just bringing that into picture here. And you can see yesterday afternoon and morning, uh, until oil did recover, the Canadian dollar was losing quite a lot of ground against the dollar CAD there. So another good correlation to keep an eye on, whether we would see a continuation of yesterday's move in oil, or actually that was all priced in and we look elsewhere with the APIs tonight and DOE tomorrow as well. So just having a quick look at how we finished across the board on the S&P here. You can see I've got the the map of the S&P 500. A lot of red on the screen. So while we've had a decent recovery since Boxing Day, it does sort of feel a bit, a bit toppy. But with the, with the earnings coming out, I think the, the impact that you saw from those Caterpillar earnings yesterday just shows how topsy-turvy it could well be. See Facebook, the main one today, and, and you've got Amazon for example, later in the week, which could see moves of similar significance either direction. So I wouldn't be looking to hold too many positions, positions for a longer period of time, uh, this week going forward. Obviously the main event today, the one that everyone's talking about, is the Amplify 10-year anniversary. But other than that, we have the Brexit guide to the amendments votes that are coming out. So the key times to be aware of for your calendars. I'm sure you've all got your notepads in front of you. The sort of the kickoff time today, got written down here, will be around 12:45. That starts as MPs begin their debate on Theresa May's neutral motion, to which MPs have been tabling their amendments. So while there is 14 amendments, doesn't of course mean that all of those will get voted through. Uh, that comes down to the Speaker John Bercow about which ones, uh, decides to put through for, for the vote, which will happen around 7 PM tonight. So we'll run through the sort of the most likely amendments that will get voted and a couple of reactions to where price could go. Obviously the, the pound this morning has already been made a new low down to S1 and is currently trading back on that pivot. Actually, if we just have a quick look over uh, how we are trading. The dollar slightly, uh, weaker this morning, actually making a new low for the week. So we'll have a quick interrupt just to have a look at a couple of those dollar pairs. The pound coming to an interesting level after breaking that trend line yesterday. You can see a retest of that would be anywhere around now, 132, the pivot and the trend line all coming in to play there. Euro-dollar, uh, quite dramatically recovering following the ECB last week. Is now at another key level of resistance as well with the R1, and also some levels not seen since the middle of January. Gold as well, see Michael was long this morning, and having broken above $1,300 yesterday and Friday, we continue to push on. So worth keeping an eye on anyone in dollar-related positions that we're seeing a bit more weakness has come into play, and this in turn is helping S&P push higher and might push oil on a bit further as well. But going back to, uh, the amendments, so 12:45 and 7 o'clock, the main areas to be aware of. Um, so as, as mentioned, John Burke will select those, uh, one amendment would be selected for 90 minutes of debate. However, it's expected that government will allow time for MPs to discuss more options. So just having a quick look, and to keep it as, as simple as possible here, you've almost got, um, it coming down to, uh, to this one here. You've got the, the Cooper Bowles Amendment, which would, uh, be more of a delay of Article 50. Of course, this doesn't necessarily mean that that Europe are even going to accept it, but this is the amendment that they would put through. This would be pound positive, and, you know, I would certainly expect us to break the high of the year. Any backstop changes, and this is where you're looking at more at Brady's amendment, this would be pound negative, and we would see us drift down. I would say there's more risk right now to the downside. I think we've had a strong start to the year for the pound, albeit, you know, you have got the weaker dollar as well. But this would be a bit of a surprise as, you know, where we're currently trading. Again, let's just bring that into picture. A lot of this is priced in. If we have a look at even just putting this on a longer time frame, going back to the beginning of January— let me just remove all the pivots— you can see here, low of the year at 1.25. We've had a pretty one-way move all the way up to 132. The, the largest red candle you see here was the meaningful vote, uh, on the 15th, and the no-confidence vote the next day, uh, yeah, completely dismissed, and we're pushing hard. So a lot of that has been priced in, the, the delay of this no deal, but tonight might well prove, uh, that to be true and confirmed, and Article 50 does well get— or supposedly could get delayed if you were to to agree with that. So I'll keep it down, uh, to simple terms in, in looking for a reaction to, uh, those charts there. Also on Twitter, which is, is pretty helpful, Viraj Patel, which I know a few of you do follow, uh, has gone through a couple of the, the options of these amendments here. Um, so you've got Grieve, which we'll, we'll come on to. This is more sort of a softer Brexit, second referendum possibility. And this again would be seen as pound positive, and I think you could see quite a push higher. Chances of this going through, sort of tabled around sort of 50/50, sort of tight if that was to happen. Uh, the Cooper, which we just talked about, the no deal off the table and the delay of Article 50, uh, extension of that, this would be, uh, seen as the sort of the biggest win. And I, I would say if I was a betting man, which I am, that I would suggest this would be the most likely. I think, as we'll come on to in a couple of moments, this would probably be seen as a big blow for Theresa May. Obviously, this Labour-backed amendment, or majority-backed amendment, and yeah, it would be sort of seen as a sword in the back. And we would, you know, albeit push higher, you know, how much longer could may go on with that. So a couple of key amendments there. Obviously not all 14 are put down, but just in terms of direction that these markets could go is definitely one to keep an eye on and have a look at that. Also, for those that do have the FT, you've got the key amendments here, which I think is, you know, very helpful just to a a quick summary of what those would be. So if we just have a quick look over at that Viraj Patel one, I'm going to go through the top 3 which are the most talked about. So the Grieve, Cooper, and Brady amendments, if they were to even get put up for vote. Of course, you know, John Bercow may well not choose any of those, but those are the, the most talked about and perhaps suggested to go through come 7 PM tonight UK time. Uh, so just having a quick scroll down here. If we, uh, go down to the Brady one to begin with, this was, as you saw in the last one, seen as the, the sort of the pound negative one. This is looking at the, uh, sort of, uh, replacement of the, the backstop, uh, alternative arrangements to avoid a hard border. Uh, as you can see here through the FT, they've got the, um, the chances of this, this going through. Will the amendment be approved? And here the FT have said that if it was to be voted on, almost certainly not. Also, uh, sort of a subnote on this, uh, there— let me see where it says the— yeah, um, uh, yeah, Brady hasn't even mentioned what the, the replacement of that backstop would be. So, um, yeah, I think the idea of this not being voted through is, is quite likely. To, you know, that it will not— the amendment not really suggesting the future plans for that. So that would almost be your, you know, sell at market, sell the pound at market scenario if that was to come through. However, I think there'd be a bit of a chatter if that did come 7 o'clock, that you would see a big move come into play for the pound. And just having a look back at the chart, I could see us getting down to 127 quite quite quickly that, uh, the low that we had on the, uh, the meaningful vote day on the, uh, on the 15th of January, I think that would be one that could come quite quickly there from a fundamental and technical point of view. Uh, moving back, having a quick look down the, the Cooper. This is, uh, sort of Labour-backed, and this would, you know, if it was up to me from a personal point of view, I think this is, uh, the the one that I would expect to happen the most. This is sort of taking the no deal off the table. This is requesting— keyword requesting— an extension of Article 50. Obviously the EU would also have to agree to that. Whether they would want to or not is up for debate. There's been comments recently that have suggested that they might, but of course overnight and previous days as well, there's been some saying they don't want to keep it dragging on and and so, and so on. So this would be, yeah, would be positive for sure, but it could well be that turns out to be a short-term positive as the EU then reject that. But, you know, come, you know, come the sort of the 29th, you know, no one's gonna necessarily both want a no deal on that. Again, this, if it was to be voted through, You know, not necessarily saying it's even going to be put up for that vote. It's seen at the moment to be on a sort of a knife edge. I think today it's worth noting that there's likely going to be a lot of chatter. We've already had a couple of comments that have come out today, so looking out for that. You know, I don't imagine that the pound is going to be in a choppy sort of sideways move. I think there will be spikes higher and lower from that. Oh yeah, Will, I've just seen your, your question about that longer-term downtrend in the pound, so I'll come on to that, uh, towards the end, uh, and we'll have a look at the charts from a technical point of view, as that definitely is, is quite interesting, um, looking at the sort of the decent room to rally from the upside. I completely agree, last couple of, uh, you know, just going back to that, um, that point we'll come on to later. But yeah, the technical break that I think holds significant weighting here, um, from a sentiment point of view. And I do actually continue to favor, uh, the upside. Of course, look, one thing comes out, and if, uh, the, the unlikelihood of Brady's amendment getting voted through, you know, we'll be below that downtrend, I think, very quickly. So, uh, yeah, one to definitely have marked up on the chart. And as a guide from sentiment, whether to prefer the long or the short, I think is, uh is a good way to go about it. The third one I want to mention, obviously, as I said, there's 14, you know, to go through all of those would take quite some time. And just flicking back to the Pound article, it actually does go through those different amendments. So please, you know, do have a quick look at that. But these are the main sort of talked ones going through here. So Grieve, this is again sort of seen as if it was to be voted through to be tight as well. This is more looking for alternatives to the withdrawal agreements, such as a so-called Norway Plus proposal, you know, for the UK to be in the EU single market and customs union. And the key thing here is, is that second Brexit referendum, which to be honest I think would be the same scenario as we're in now, but one to bear in mind. Those would be the sort of the main three to focus on. I think if we were to have the Cooper one that gets pushed through, you're going to have the chatter continue about Theresa May. Here you've got the article sort of running through, May faces losing control Over Brexit despite gamble on, on backstop. So, you know, this is the sort of, you know, having a read-through of this article, sort of reiterating the fact of, or sort of that Labour-backed, uh, sort of amendment, uh, which would be, you know, uh, sort of seen as a humiliating loss for Theresa May. So there's, you know, it wouldn't be surprising to see, you know, another no-confidence vote perhaps. Um, headlined by, by Jeremy Corbyn if that was the case. And you know, that's more political uncertainty, and actually we could then start to perhaps come a bit lower again for, for the pound there. So definitely going to be an interesting sort of afternoon, 12:45, 7 PM, your key times to be aware of. And then some unscheduled comments that will come out, no doubt, as well. You've actually Also in the mix there, you've got, uh, Bank of England's Howard Dean speaking, uh, at, uh, I think 5:30. We'll come on to look at the Canada shortly, but another one to bear in mind going forward as well. Mentioning on the, uh, the one that I think most popular, the, the, or most likely I should say, the, the Cooper Amendment, uh, if that was to see the delay, is, you know, not to say that is definitely going to happen. There's some EU states are weighing conditions for Brexit extension. You know, do they want to keep this dragging on? I mean, if that was the yes or no question, do we want to see Brexit drag on, no one's going to say yes. So it's an interesting one if that was to get put forward. Would they actually accept the extension? I personally think they would. I think no one does want that no deal. And some comments even overnight, I think from the Lithuanian president saying that it'd probably be helpful if they were to see a postponement of Article 50. But the longer we will drag both sides in the process, the more damage we will make. So, you know, that is for sure. But I think longer term, you know, if we can get this deal as good as possible for both sides, does it matter too much about how long it delays? Yes, short term. Longer term, not really, uh, in my eyes. Elsewhere, looking at, uh, sort of headlines from overnight, it was quite interesting to, to come in and, and see this one here. Oh, not this one, that's the one I'm going to come on to. Uh, the, the— yeah, US Mnuchin expects progress in complicated China trade talks, uh, said this positive headline, uh, and looking at the, the chart, and we'll go S&P for sort of the guide of this, and bringing up that low that you see bottom right, Boxing Day low, uh, we've continued to sort of rally. We— yes, we have still consolidated a bit near some very important technical points, currently up 13.8% from that low. Looking at where we are now to the high Is that 11.6%? Incredibly, doesn't seem that much really, does it? Um, but yeah, so he's got a bit of room to play with, Trump. And I mentioned this a couple of times, and you know, until 1st of March, which is still, you know, time away in the markets and everything can happen, I think he will go down the route of playing a bit of a harder ball. This week I think will probably be dominated, uh, S&P move-wise by earnings anyway. But it'd be interesting to see how these sort of comments come out trade-related. But this would be seen as a bit of a positive. But if you had just seen the, the other screen that I had shared there, US unveils criminal charges against Huawei. So yeah, one good headline, one negative, and, and that sort of cancels each other out. And to be honest, while, you know, I do see all-time highs in equities these couple of months. I do honestly believe that we've got a couple of hurdles in the way. Most importantly, uh, the, the 12th of December high. I think that's an absolutely massive level. You've also got a moving average that comes around there, and then you've got the Fibonacci level from that high to the low. Let's just put that on for reference, just roughly drawing that, the 6.18. And then above that you've got the key trend line So there are absolutely some, some key levels in the way. I do see us getting through, but short term, importantly, maybe over the next couple of weeks, I can see us drifting a bit lower, which will again be, be quite, uh, interesting from a trade or intraday perspective as well, opportunity-wise. Again, retest of that trend channel yesterday provided very good support. So if you're If you are looking for a more medium-term position to go short, which, you know, I'm, I'm not necessarily going to be buying right now, I would actually be interested to, you know, to see us close below here and then how we can actually potentially even drift lower. So, you know, that's trading for you with the different possibilities there. With, with earnings coming out, I want to keep an eye on today will be the the main component from the DAX. Let me just bring up that article, which I think must be on the other one here. Yeah, so SAP sets restructuring after missing 2018 revenue profit goals. So just having a look at the, the DAX this morning, which initially was, was pushing lower quite significantly. So the recent recovery in stocks and in the weakness in the, the dollar as well, helping that recovery in oil. Safe havens actually coming off a tad. The yen actually now near its sort of low of the day against the dollar. But initially on the open, the DAX was under pressure, making a new low for, for the week there. So keep an eye on, on SAP, obviously the main component of the DAX, as just shown here from our trusty friends at Wikipedia. I just scroll down there. I just have to move it across slightly, uh, index weighting, uh, above the Siemens and Bayer there, uh, as well. So keep an eye on how that goes and how that could shape, uh, obviously the, uh, the stock markets, uh, today. Interestingly, well, actually, let's have a quick look over at the earnings for the week as a whole. I'll just transition my chart there. The main one um, that we've got, uh, well, Wednesday after close you've got your Facebook, which will be quite interesting. After close today you've got Apple, uh, as well. 3M before the open. So keep an eye on the Dow Jones, yeah, uh, this, this afternoon. What we saw with Caterpillar before the open yesterday was the direction until about half 5. So keeping an eye on, on that as it comes out. Also this week you've got Microsoft, you've got Amazon, So some exciting opportunities into the sort of the close of, of the sessions. 9 PM usually when Facebook and Amazon have come out UK time this week. So you wouldn't want to necessarily be holding positions over overnight or after sessions. It's going to be probably a choppy week and how we sort of finish, how we close Friday will be massively important. Important for, for shorter-term, uh, direction. Uh, the Facebook earnings— there's a quite a good article that is on, uh, the, the 5 things to watch when Facebook reports their, their fourth quarter results. We'll have a quick run through of this, uh, tomorrow as obviously that comes closer for, for Wednesday. Uh, we have, uh, some interesting earnings let's just put it this week. And I do think from a trade opportunity perspective, it, you know, those waiting patiently for, for those to come out will, will be the, the way to go. Also this morning, in, in sentiment-wise, we were coming low and Royal Mail was, was down quite significantly. Uh, so equities and as a whole were under quite significant pressure, have almost just turned on a knife edge recently. EUR stocks back up to its higher the day. The DAX has recovered most of its down move, and the S&P also near, uh, the pivot of today where we had key resistance yesterday. Um, so yeah, interesting day for other markets than your pound-related assets as well. Having a look at the calendar just to, uh, wrap the sort of headlines off with you, if you like, before we look more technically Uh, just zooming in on that main thing to be aware of, uh, data-wise, scheduled data-wise. 3 o'clock you have the consumer confidence, uh, from January, 124 expected, which is, is a downtick from that previous number. Again, worth keeping an eye on, not necessarily want to hold any dollar positions over that. And then you have the oil API back to its usual Tuesday 9:30 following the Martin Luther King Jr. Day last Monday, so that was all pushed back a day. That's back in its usual slot at 9:30, so one to keep an eye on for oil traders heading into tomorrow's session. 5:30, you got, uh, Hal Daines, uh, speak— speaking as well. So, you know, in the mix of everything going on with the pound, just something to be aware of and keep an eye on. But the key times today, 12:45 and then 7 PM is when it's going to get most interesting, or it should do anyway. Having a quick look over at the charts, how we're trading from that technical point of view. Just, just bring in oil. As, as yesterday, you know, it was really interesting to see. I actually had this trend line drawn on about, you know, 10-15 minutes before, uh, and it hit it absolutely perfectly, linked in with that low that we had back on the 17th. You can see the retest of this trend line, which I think Anthony had on previously, along with yesterday's low, is really containing price action there. So both levels of interest that I would have on a break of that and 52.50, it would be a surprise to see us get to 52.88 and 53 very quickly for oil. Having a look at the, the pound, and just going to take the, the pivots off and look at this on a more longer term perspective. Just going to have this sort of weekly Uh, look on is as well, just put on a daily. So having a look at the trend line that we broke through here, this is quite an interesting one. Also another one that I would have on still is going from the, the 26th of September. So these trend lines where the breaks and closes above would be obviously very significant to remain that way. Today the, the votes obviously could influence price pretty, uh, quickly, but I do short-term feel that we are going to carry and continue to push on. And as a short-term target, just below 1.35 I can see happening, uh, in the short term, and, you know, potentially even by the end of the week, uh, to, to be honest. Elsewhere The dollar, as mentioned, was slightly weaker this morning. You've just seen a bit of a, uh, a profit take, uh, across the board. Euro on that R1 first test, very strong. Gold on the R2, again an area where people have looked to have taken profit. Just having a look at US equities, which, you know, as I mentioned, perhaps being patient today is the way to go, but from a technical sort of, uh, resistance area, the pivot, the low from the high from yesterday evening as well, looks to be quite interesting. Obviously we'll be on the mic throughout the day, uh, commenting on what could be one of the sort of the best days, uh, market opportunity-wise for the pound. But any questions, as usual, please do get them in the, in the chat throughout the day as well. And if not, I hope you all have a good trading day.