Just when it seemed that the pound might be able to keep its head afloat, talks of a possible leadership challenge to PM May spurred another leg lower.
The euro was also on weak footing, bogged down by protests in France over Macron’s economic reforms and likely by expectations of a less upbeat ECB statement this week.
Trade optimism continued to lift the U.S. equities and the dollar for the most part of the session but Trump’s threats of a government shutdown pared gains before the close.
- U.S. NFIB Small Business Index slipped from 107.4 to 104.8 vs. 107.3 forecast
- U.S. headline PPI up 0.1% vs. projected flat reading, 0.6% previous
- Nov. U.S. core PPI up 0.3% vs. 0.1% forecast, 0.5% previous
- U.K. Conservatives may have gathered at least 48 letters enough for no-confidence vote
- U.K. Conservative MP Bridgen: May could face leadership challenge this week
- Graham Brady reportedly set a meeting with PM May on Wed night
Leadership challenge for PM May?
As though No. 10 didn’t have enough Brexit deal troubles to fret over, Conservative MPs have another thing to add to her plate as they were said to have gathered enough letters to trigger a leadership challenge.
You see, lawmakers aren’t very happy about PM May’s decision to delay the “meaningful vote” in order to buy more time to renegotiate with EU leaders in hopes of getting the deal through parliament.
Word on Downing Street is that at least 48 leaders have submitted letters to the chairman of the 1922 committee, Graham Brady, to call for a vote of no confidence. Deputy political editor of Sky News Beth Rigby tweeted:
Confidence vote watch. I know it’s a dangerous game to play and Sir Graham is keeper of the list. But my ERG sources pretty confident now that 48 trigger been breached. Of course Sir Graham won’t announce while PM out of country – and we’ve been here before. But mood hardening
— Beth Rigby (@BethRigby) December 11, 2018
Conservative lawmaker Andrew Bridgen also told Sky News:
“We will have a confidence motion so Conservative MPs will vote whether they have confidence or not in a secret ballot at the first opportunity which I think could be tomorrow night.”
So far, Brady has yet to make an announcement and many say that he probably won’t do so until PM May is back in the country. After all, she is busy making the rounds in Brussels and Berlin in an effort to piece together a transition deal.
Take note, though, that Brady has set a meeting with May this Wednesday night (GMT) as BBC’s Political Editor Laura Kuenssberg mentioned:
Hearing that SirGraham Brady has asked to see the PM after #pmqs tmrw, and multiple sources, including senior tories and a cabinet minister, telling us tonight they believe the threshold of 48 letters has been reached – v unlikely to be any confirmation until tomorrow
— Laura Kuenssberg (@bbclaurak) December 11, 2018
Dip in risk-taking
The session kicked off on a positive note as risk-taking was in play during the previous trading sessions. However, equities returned some of their gains when the POTUS threatened a government shutdown if Congress doesn’t fund his border wall.
- Dow 30 index closed 53.02 points down to 24,370.24 (-0.22%)
- Nasdaq is up 11.31 points to 7,031.83 (+0.16%)
- S&P 500 index is up 0.94 points to 2,636.78 (-0.04%)
“If we don’t get what we want, one way or the other, whether it’s through you, through military, through anything you want to call, I will shut down the government.”
Major Market Mover(s):
Pound bears found another reason to push the currency to fresh lows as updates suggested that a leadership challenge is mounting for PM May.
GBP/USD slid from 1.2616 to a low of 1.2480; GBP/JPY tumbled from 142.77 to 141.67; EUR/GBP popped up to .9062; GBP/AUD fell from 1.7493 to 1.7318, and GBP/CAD is down to 1.6719.
Watch Out For:
- 11:30 pm GMT: Australia’s Westpac consumer sentiment (2.8% previous)
- 11:50 pm GMT: Japanese core machinery orders m/m (10.2% rebound eyed)
- 11:50 pm GMT: Japanese PPI y/y (drop from 2.9% to 2.4% expected)
- 4:30 am GMT: Japanese tertiary industry activity index (0.9% rebound expected after earlier 1.1% slide)