8.10 - pound future will solve with the new trade agreement
- by Anna K.
New perspective of the trade partner for the United Kingdom may hit dollar hard.
Traders with experience know that there is virtually nothing that the markets hate as much as uncertainty. And with markets having so much common with politics, that makes the situation that much harder. With political climate in the world changing day by day it is hard to predict which asset is going to be influenced next and in which side and that is why trading became so much harder recently.
The most recent example of the situation is oil prices. We can clearly see how the political disagreements of several counties and the emerging of Iranian problem with those disagreements. With the sanctions looming over the output numbers, prices for oil skyrocketed and we saw two extremely good weeks when it came to oil prices. But today we see that the gains were not held onto by the crude. The fall came because of the new statement on the matter. The US said that they are going to make some loopholes for the countries who were going to go along with the sanctions and stop buying Iranian oil.
That brings us to the recent situation when there is no certain information on how much the output is going to be hit in the nearest future and how much trouble we are in for. Although one thing seems clear – output is not going to be that much pf a problem and the supply-demand relationship might not be as rocky as we thought it would be. And the prices for oil, seeing a scenario like that fell immediately.
Brent declined by 1 percent since the markets opened today and something tells us that that is only the beginning of the turbulent oil prices. Right now oil prices are not viewed as bullish and the price is also being cut from the outside.
Investors see the problems with the asset and try and drop the asset right now before the ride turn into something that is too much for them now. And the more of the immediate crude as well as futures is dropped now, the lower the price is going to sink. Finally, we see the obstacles that the high prices for oil are carrying for us. Although we have to be honest – we did not see the United States dropping their attitude coming.
So, how are we to get out of the situation, surrounding us? Well, for starters no panic. The golden rule of trading must be implemented now, when the prices only starting to sink. Looking at the further development of the situation and analyzing the price movements – so, all of the standard actions for this situation. With oil getting sold off and prices sinking, the crude becomes more and more attractive for traders and investors around the world. And being this attractive can surely boost the price, as the demand for cheap asset goes higher.
With Brexit getting closer and closer to us it is no wonder that Britain would found itself in panic situation. It is likely that no-deal Brexit id going to take place rather than the deal Brexit as the deadline for the decision has come and we still have no answer from either of the sides of the deal. That is why panic in onto the United Kingdom. Trade partnership is something that ensures the perfect financial future of the country that is about to sever one of the most important and resilient economic and trading bond in the world.
That is why it comes a saving and a huge surprise that soon the United Kingdom may find itself in the new trade alliance with absolutely new trade partners as Japanese Prime Minister says that Japan and its partners in the Trans-Pacific Partnership would be really glad to see the United Kingdom in one basket with them.
And it is perfectly clear to us why some of the countries would already try and snatch UK as their future trade partner. The thing is that the UK was never a full part of the European Union. It never adopted euro and it never was a part of the Schengen zone. It was only enjoying benefits of the free trades with all of the EU countries and now when those ties are going to break it is still going to be a very powerful country with quite string national currency.
As Japanese Prime Minister supported those, who voted who Brexit and claimed that Britain will never become a weak country he, of course had the interests of his own country in mind. Although United States want to have a new trade agreement with Japan one cannot be too careful with Trump’s outlook on the international policies today. And we see that with the help of UK Japan wants to establish its relationship with a country that is more reliable and stable that the United States.
What is really interesting are the countries-members of the Trans-Pacific are Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. Those are either Asian countries or the countries which were in different ways hit by American sanctions. Do you see what is the tendency here? All of the countries that were hit by Trump’s tariffs joined together and planning their free trade future together without the United States given that Untied States never came through with the signing of their partnership with the alliance when Trump came to the office.
The countries mentioned above, all joined together have all the changes in forming a potentially very strong and dangerous for dollar trade bond. Signing out of this one may be a very serious mistake for Trump’s administration as it may signal about yet one more threat to dollar.