Aud/Usd

[GreenApple]

Even if Britain can agree a deal, Prime Minister Theresa May will need to get parliamentary approval — far from guaranteed given her Conservative party lacks a majority and factions within her party oppose her approach.

[GreenApple]

Sterling neared 15-month lows under $1.27 on Tuesday after Standard & Poor’s warned Britain it was likely to endure a long recession with a no-deal Brexit. The currency recovered slightly on Wednesday.

[GreenApple]

Financial options knows as risk reversals - which measure demand for options that give investors the right to sell sterling at a future date versus options that give them the right to buy - show traders are increasingly concerned about the pound tumbling between December and April.

[GreenApple]

Traders hold a more negative view on the outlook for the pound than at any time since shortly after the Brexit referendum in 2016, according to options markets, as fears grow that Britain is headed for a sudden, disruptive exit from the European Union.

[GreenApple]

“However, the risk of a worsening in the US-China trade war, slowing global growth and the potential for slowing US growth and a plateauing of Fed rates suggest that the yen could win back some ground versus the greenback next year.”

[GreenApple]

Although monetary divergence between the Fed and BOJ gives the dollar the upper hand versus the yen in the medium term, some analysts believe the yen may actually strengthen in coming months.

[GreenApple]

The yen was up a touch on the dollar at 112.78. The Japanese currency weakened to a three-week low of 113.38 on Wednesday after the BOJ signaled its intention to maintain its ultra loose monetary policy for some time.

[GreenApple]

“UK is still no closer to an agreement. They are beyond the critical period of negotiations which means BoE governor Mark Carney will be even more worried about the downside risks,” said Kathy Lien of BK Asset Management.

[GreenApple]

Traders are also looking ahead to the Bank of England’s (BoE) monetary policy decision later on Thursday. Economists polled by Reuters expect the nine members of the BoE’s Monetary Policy Committee to have voted unanimously to keep rates on hold this month, and on average do not see a further rate rise until May.

[GreenApple]

This would give UK financial services companies continued access to European markets after Brexit. The pound, which was last $1.2843, up 0.62 percent on the day, has lost 3.6 percent versus the dollar over the past three weeks as markets fretted over whether Britain would secure an orderly exit from the European Union.