(03 DECEMBER 2018)DAILY MARKET BRIEF 2:Brexit disappointment ahead

Things are all downhill from here for Prime Minister Theresa May. Debates in parliament start tomorrow, with a vote on Brexit planned for 11 December. We remain negative on EUR/GBP, expecting a further decline to 0.8810 when the deal is rejected. 

Elsewhere, markets are buoyant. US President Trump’s indication he will postpone additional tariffs on China has triggered a broad rally. The Hang Seng and Shanghai composite were up 2.55% and 2.57%. The US-China armistice will last for 90 days, enough time to negotiate a longer-term agreement. If this is positive, much-maligned Chinese assets and emerging markets will come roaring back. Meanwhile, promises by Russia and Saudi Arabia to lengthen their deal on oil production cuts has enhanced oil prices. Oil linked currencies NOK, CAD and AUD have bounced off recent lows. Reports that Qatar will leave OPEC next year has had a marginal effect: the nation is only the 11th largest producer in OPEC. Purchasing manager surveys are looking good, suggesting a potential Christmas rally.