Markets brace for crucial Brexit vote in week ahead

The upcoming week is going to be dominated by international political risk events, where we will see Brexit again appearing across the global media headlines. The UK Parliamentary vote for MPs to approve the deal purposed by Prime Minister Theresa May next week is going to be closely monitored by investors around the world. If anyone thinks this should be considered as an isolated UK political event, then they need to remember the global market chaos that ensued the night after the historic EU Referendum of June 2016.

If MPs do not support the deal that is on the table from PM May, and if this creates a serious level of market panic that the UK is on the edge of falling into a feared “disorderly” Brexit, recent history could very well repeat itself.

Elsewhere, although global sentiment had previously benefited from the development of a trade truce between the United States and China, any narrative around the potential for changes to this narrative will remain a sensitive risk to investor confidence. The comments that President Trump made on his social media feed a few days back regarding this truce have already made investors second guess the conviction of the United States to commit itself to this agreement.

Focusing on the economic calendar, the week will be jam packed with Tier 1 releases from major nations.

Monday kicks off with UK GDP manufacturing production m/m in United Kingdom. Much attention will and the be directed towards the UK average earnings report on Tuesday, while Fed Chair Powell will be in the spotlight on Wednesday. Buying sentiment towards the Dollar could take another hit if Powell reiterates his dovish stance. With the ECB meeting in sharp focus on Thursday, it will certainly be an eventful week for financial markets.