Category: Financial News

In this category, Latest Financial News visitors can find everything that Traders-Paradise finds it is related to the educational material existing here. As the name suggests it is news but ONLY related to Traders-Paradise’s tutorials, courses, guides about trading, and investing.

Here the readers can find posts and articles about recession and how to overcome it. Many trading or investing strategies are explained here. For example, why to use open interest strategy when investing, or growth stock investing strategy.
Here, our experts and journalist are taking examples from the real-life. it is usually breaking news, and use them to explain what is the best solution for traders and investors over a given time or related to the particular event.
Also in Latest Financial News readers can find an explanation of, for example, ratios useful to measure the particular market conditions.

Also, Traders-Paradise gives you some clues on how to react to changes in the markets, no matter if it is the stock market, the Forex market, or any other.
The main aim of the Latest Financial Market News is to connect the real events with the theory. Traders-Paradise uses real-life examples to explain the theoretical rules of investing and trading.
Also, when some breaking out news appear Traders-paradise will write about it but at the same time, the visitors will have a comprehensive analysis of what caused that event and how to overcome it.
Traders-Paradise hopes that this category will be very useful for its visitors and that they will find it helpful.

CGEX Will Shut Down Its Service In September

2 min read

CGEX (Coinone Global Exchange) will shut down its service

CGEX (Coinone Global Exchange) will shut down its service in mid-September. This Malta-based crypto exchange started by main South Korean exchange Coinone, will end its service. CGEX started in October 2018.

According to an announcement on August 12, the exchange will shut down services at 2:00 a.m. UTC on September, 18 after only one year of working.

Is CGEX facing setbacks?

CGEX placed an assistance termination notice on the front page of its website. They mentioned that has decided that they can’t maintain service further.

In the announcement, CGEX informed its clients that all assets on user accounts have to be withdrawn by the closing date. The additional withdrawals will not be available after that date. They stated that the personal user data, along with transaction details, will be erased with the closing of service.

Before shut down

CGEX’s shut down follows after notice of temporary termination of trading and transaction services on the platform. Actually, on June 17, CGEX first stated that they would temporarily stop trading and deposit services to “prepare for a new paradigm change in cryptocurrency exchanges”. At the time they planned to launch a new trading platform. The exchange told that the new CGEX would be launched in Q3 2019.

This shutdown is expected for a long time. Two months ago, the exchange suddenly halted trading operations. Well, this event isn’t new or unusual. Many exchanges have the same problem from time to time. But surprise arose when CGEX recommended their users to withdraw their holdings to avoid whatever possible losses. The former pause was temporary, but this new statement looks like the end of CGEX. This exchange has advised its clients to get their actions in order before the end.

After the exchange closure, clients will not have the possibility to log in. Also, withdrawals and deposits will be unavailable. The client’s personal records will also be destroyed. Still, some will be kept which is an obligation to legal demands.

More news about similar issues

Major crypto exchange BitMEX announced yesterday (August, 19) that it will restrict access to its platform in Seychelles, Hong Kong, and Bermuda. This action came, as they announced, to ensure the security of funds and the stability of the exchange.

The exchange restricted access from countries of its parent company, HDR Global Trading Limited. BitMex insists that this is a proactive step and noted, “This change will have no financial impact on the business and will affect very few people.”

BitMEX noted that closing trading is part of a broader initiative, an effort to provide transparency to this field as it shifts to be more regulated. BitMEX is the second-largest cryptocurrency exchange. A BitMEX’s 24-hour trade volume is over $2.5 billion, according to CoinMarketCap.

Also, Binance DEX, developed by crypto exchange Binance, blocked web interface access to users based in 29 countries.

Who is next?

20th August 2019
Europe’s banks will end Eonia the current interest rate benchmark

2 min read

A body advising ECB has warned the European Central Bank to be prepared to end Eonia interest rate benchmark. Eonia is currently used to price more than €24tn of derivatives, loans, and bonds, a body advising the European Central Bank has warned.

To prevent markets to become more confusing and legal conflicting, it is necessary to shift away from the Eonia interest rate benchmark. That stated the head of the ECB’s working group supervising the transition for the Financial Times.

Eonia involved in scandals

Current interest rate benchmark Eonia caused plenty of scandals and market manipulations. The consequence is ruined confidence in how the current benchmark is calculated.

Instead of Eonia, the €STR (ester) benchmark will be placed from the beginning of October.

“I am worried about complacency among market participants, especially as regards the change in the timing of the publication of Eonia, which takes place already on October 2 and creates very significant operational challenges,” said Steven van Rijswijk, the chief risk officer at Dutch bank ING.

In July ECB Banking Supervision announced a letter to CEOs of important financial organizations about the global benchmark changes. That is mandated by FSB. The letter seeks insurance that companies’ senior managers and boards recognize the risks connected with the global benchmark changes. Also, it was asking them to take relevant steps to secure a stable change to alternative or reformed benchmark rates. All that before the deadline, previously settled for the end of 2021.

The ECB letter also pointed out that some modifications in the methodology for relevant benchmark rates will be added in October 2019.

In the financial crisis peaks, banks were punished billions of dollars.

Some bankers were sentenced for manipulating interest rate benchmarks like Libor, Euribor and Eonia. The majority of the benchmarks are replaced or completely restored.

Europe has already hesitated the Eonia replacement for several years. That’s why slowdowns in other countries like the US and UK in securing the shift. Along with switching to the new €STR standard, market participants would have to adapt to a timing change. The new transition rate will be published by the ECB at 9:15 am UK time not the prior evening as it was since now.

For the next two years, both €STR and the transition Eonia rate will be published alongside. Eonia will be totally removed at the start of 2022. The transition rate will be priced at an 8.5 basis point discount to Eonia.

The transition could influence the financial organizations for the value of derivatives and other products. The working group had written to the International Accounting Standards Board, which is supposed to decide on the case in the upcoming months.

“Millions of contracts need to be changed,” said Mr van Rijswijk. “That will cost quite a bit of money.” He calculated that institutions need to adjust their IT systems and correct data, procedures, and structures.

20th August 2019
Satoshi Nakamoto to Reveal Identity

Who is a real Satoshi Nakamoto?

By Traders-Paradise Team

Who is Satoshi Nakamoto? What is the origin of the iconic pseudonym? Who is behind it? How Bitcoin got this name?

Curiosity will probably be satisfied soon. All we have to do is to wait for the next several hours. And to check www.SatoshiNRH.com where Nakamoto plans to reveal his/her or group’s identity under the topic “My reveal”. Also, the address where you can check it and read it is www.ivymclemore.com.

Satoshi Nakamoto’s silence will be broken on Sunday, August 18, at 4 pm EDT (Eastern time zone).
The promise or decision came after 10 years of anonymity and creating one of the biggest mysteries in the past decade.

Our source claims that Nakamoto will reveal his real identity but in this three-part series he will reveal his education, origins, professional education. Also, it will be interesting to find out why his 980,000 bitcoins are still untouched.

All about Satoshi Nakamoto

Nakamoto will explain the role of his dedication to Chaldean numerology and how that influenced his decision to create Bitcoin.

The enigma is why he decided to reveal all these things including his identity today, August 18, on the day when he registered bitcoin.org through AnonymousSpeech.com. But he promised he will explain
The grand finale or culmination of the revelation of this secretiveness should happen on Tuesday in the third part. That will be an introduction of Tabula Rasa, Nakamoto’s vision for Bitcoin’s rebirth all along with the full announcement of his identity.

So, let’s say the first two parts on Sunday and Monday, are for warming the curiosity.

According to Ivy McLemore & Associates:

“Indicative of the compelling evidence he presents in each part of the series, Nakamoto will illustrate the role that ciphers and encryption-related to his devotion to Chaldean numerology played in many decisions in his creation of Bitcoin.”

Bitcoin code

So, we will see.

We found interesting reactions to this news. Forums are burning, social networks too. Everyone has some top secret info. We will point just a few of them:

“Satoshi” is most likely a state, intel or oligarch level private entity that will never be revealed and is likely not just one individual considering the bitcoin paper release coincided with the Great Recession.
Great Recession cliff was 15 Sept 2008.

Bitcoin paper was first published on 31 October 2008.

Even if “Satoshi” was to do a transaction I’d figure the person would be a front person for that entity anyways. The engineers that built it for this entity are already probably suicided or intel themselves.”

“The fact the entity hired a PR firm and has the sole goal of pushing a new company/product, even if it were the real person, means it is not the real person.”

BTW, this is clever, “Ivy McLemore & Associates” is a marketing agency.

Never mind, the only several hours are between our questions and his answers.

Traders-Paradise will also follow @SatoshiNRH on Twitter.

And we will all know if this is a marketing trick or real reveal of a mysterious identity the father of Bitcoin.

18th August 2019
Crypto Hacker, Decline – Crypto Market is Facing Difficulties

2 min read

According to News BTC: “the total crypto market cap declined to $242.0B and is currently correcting higher. Bitcoin price is currently correcting higher and is trading above the $10,200 level. BCH price stayed above the $300 support and it is currently near the $310 level. The EOS price is currently consolidating above the key $3.500 support area. Stellar (XLM) price is slowly recovering higher towards the $0.0700 and $0.0720 resistance levels. Tron (TRX) price is trading in a strong downtrend below $0.0200 and $0.0180.”

Bitcoin and the crypto market cap are recovering towards key resistances. Almost all cryptocurrencies are trading in a major downtrend.

But our attention is on hacking the cryptocurrency exchange Binance.

The crypto hacker behind personal user data supposedly stolen from crypto exchange Binance is planning to publish additional material. So, we can expect a new wave of leaking data.

Crypto hacker was playing his abnormal game in a series of tweets today, on August 16. A Twitter profile is known as Bnatov Platon tweeted an outline of Binance Know-Your-Customer (KYC) data supposedly he or she holds.

This was followed by other tweets.

Crypto hacker is making jokes

You will notice there is no timeframe for these screenshots but hacker or someone in his beneath showed Telegram chats with the person named as a member of Binance’s customer service team. There is no evidence that KYC images are collected from Binance.

The tone and arrogance in crypto hacker’s tweets are impressive. Bnatov Platon with handle @BnatovP joined the Twitter this month. With one purpose, obviously. To show how vulnerable private data is in some crypto exchange. Or on the internet overall.

But speaking about this particular case, as Cointelegraph reported at the beginning of August, Binance rejected any agreement to its user data. They were arguing the person behind the alleged robbery was a scam.

The Binance had one statement at that time:

“At the present time, no evidence has been supplied that indicates any KYC images have been obtained from Binance, as these images do not contain the digital watermark imprinted by our system.”

The Binance also noticed that the images all seem to be dated from February of 2018. Why is this important? At that time Binance had engaged a third-party KYC service provider to handle requests at that time.

Among other problems with hackers and scammers, this one is especially rude. Well, guys, someday, someone will catch you! As always do.

16th August 2019
PlusToken The Biggest Scam In The Second Part of 2019

3 min read

PlusToken was a classic Ponzi Scheme. Its operations were held in Korea, but also in the Chinese market. How Traders-Paradise is sure it was a Ponzi scheme?

PlusToken was founded in 2018 and announced high returns at various discount percentages for most active members. What does it mean? To really have the right on rebate, members were obliged to bring more and more newcomers and then would climb to the higher levels. A classic Ponzi.

At the beginning of this year, those criminals declared to have more than 10 million members.

OMG, how many naive people! Greedy? Just a false number? Everything is possible. The fact is that those scammers snatched $3 billion from their members. But despite the fact they escaped from the law, their website is still alive as much as their social networks accounts.

Okay, they didn’t have enough time to wipe off everything. More important is to save the neck and fat wallet.

“Mr. Leo”, the co-founder of PlusToken

PlusToken scammed about 10 million investors of $3 billion.

Actually, withdrawals on PlusToken started to stumble in June.

The scammers declared some technical problems as the reason. For everyone with less greed, promises given from these scammers should sound impossible to be executed. What did they promise? Nothing! No investment strategy, no valuable information, only 6 to 18% returns per month plus referral commission.

Recent research exposed PlusToken as scammers, who were acting outside the internationally used crypto social media. They were a lonely player succeeded to raise billions. On the illegal way. The police in China took some action but it wasn’t finished with arrests or investigation.

The criminals with an offer of exceptional earnings succeeded to fill their own wallets with a Bitcoins.

Dovey Wan, the co-founder of Primitive Crypto and one of the more influential Twitter accounts, brought the PlusToken story to the attention of a wider audience.

How do they stay so long unrevealed?

The essential reason is lack of communication and the existence of rivalry between Western and Chinese crypto-fans and exchanges.

The PlusToken actions were mostly ignored. The other reasons could be using different social media or the presence of language barriers. That held Asian investors to the hell.

These scammers were not modest.

Only a few weeks ago just a few days before their escape, PlusToken announced that it’s expecting to have over 10 million members to the end of 2019. Two or three months earlier they said to have 3 million users. It is obvious that they boosted those numbers because they never showed any relevant evidence for those words. Moreover, they operated under the radar, you cannot find so many details or information about the people behind this scam. As we mentioned, at the beginning of this article, some co-founder is mysterious Mr. Lee.

Take a look at the image above again.

When the scam was revealed messaging platforms reveals members who said they’ve lost up to $5,000. If you take a look at some tweets you will find some members from China who had contacted Hunan province police. How all of this will end is still unclear, but something has to be said: never be greed, use the proven exchanges and wallets with an excellent reputation. Every time when you notice that someone is offering you enormous returns, run away from such.

At any time you can check if some exchange is good in Traders-Paradise’s WALL OF FAME
The scammers are in our WALL OF SHAME

16th August 2019
The German market is overflowed by fears of a slowdown

2 min read

by Gorica Gligorijevic

German fears of stock markets’ slowdown rose causes the fear, that the whole country may slip into a recession. The day before the US announced its decision to delay part of tariffs on Chinese imports.

The trigger in the German’s markets was news that the country’s economy declined 0.1% in the second quarter of this year in comparison with the prior quarter. According to some analysts, the fears are caused due to global trade conflicts coupled with difficulties in the auto industry. The decline of 0.1% was just a trigger to show them.

“Data showing that the German economy contracted in the second quarter reignited fears of a global recession, dampening demand for riskier assets such as equities,” said Fiona Cincotta, market analyst at City Index

Many European markets are down.

Germany’s DAX was down 1.5% at 11,575. The CAC 40 in France dropped 1.4% to 5,288. The FTSE 100 index of leading British shares was 1% below at 7,181.

The US Wall Street was ready for similar drops at the bell end with Dow futures and the wider S&P 500 futures falling 0.9%.

Tuesday was one of the better days in the markets. The US Office of the U.S. Trade Representative announced that the US will delay the tariffs on some of China’s products like consumers goods. But some sorts of fish or baby seats are entirely removed. The new trade policy will be on scene until December 15.

European shares stabilized on Thursday

But prior there was a brutal sell-off. It was fired by overall fears of a recession. The investors were expecting central banks would relax monetary policy and calm nervous markets.

The pan-European STOXX 600 index dropped at 0828 GMT hitting the point very close to six-month lows.

The trading volumes in Italy, Austria and Greece were closed for a holiday. Almost all European markets moved to the negative area.

London’s FTSE 100. underperformed its European rivals, burdened down by oil main and some stocks that traded out of dividend right.

In profits news, strong numbers from beer maker Carlsberg In Denmark (CARLb.CO) and shipping group A.P. Moller-Maersk (MAERSKb.CO) pushed stocks of these Danish companies to more high-priced.

Drillisch and United Internet slipped below after the German telecom company lessened its profit outlook.

Here is a short summary of EU markets:

UK FTSE 100 -1.7% hits two month low
German DAX -2.3% hits a four-month low
French CAC -2.2% hits one week low
Italy MIB -2.8% hits two month low
Spain IBEX -2.2% hits two month low

The German DAX again broke the 200-day moving average, the last low was in June. It stopped at the 50% retracement of the rally in December. DAX primarily have to survive on that level. If don’t, the market may be very violent. But if Angela Merkel announces a 180 on deficit spending, the investors on the German stock market will have hope.

15th August 2019
Morgan Stanley Claims We Are In A Bear Market

2 min read

The analysts from Morgan Stanley claim that we are in a bear market.

Any proof? Don’t tell me you missed it!

The US S&P 500 Index was closed on Friday down by 3% compared with the highest level in late July, 26, registered in intraday trading. Bear market means the stock prices drop 20% or more but the corrections include price falls about 10%.

So, you may ask how we already enter the bear market if prices dropped by 3%, it so far away from 10%.
Morgan Stanley anyway claims that “we are still mired in a cyclical bear market” pointing three spots in this estimation.

The proofs of the bear market

First, compared to the beginning of 2018. the S&P 500 is “roughly flat”, but Friday’s closing was less than 1% over the intraday high noticed on January 26, 2018.

The other evidence is the fact that 80% overall equity markets dropped by 10% already.

And third, the other US market indices are down by approximately 10%.

Morgan Stanly further noticed that during the past year and a half, a majority of global stock market indices dropped notably from their highs. Actually, all stock markets were more volatile than during the previous two years when we had the bull market profits.

“At this point, we would view our call in January 2018 for a multi-year consolidation and cyclical bear market as well established and documented,” said Morgan Stanly in conclusion.

The Morgan Stanly report notes that both the small-cap S&P 600 and the mid-cap S&P 400 didn’t reach new highs in 2019. Also, both dropped by more than 10% from prior highs noticed set in September. 2018.

The statistics

The statistics show, among eleven S&P 500 sectors, five have reached new highs this year with consumer staples, utilities, and REITs as leading. The two others are consumer discretionary and the IT sector.

Morgan Stanley states “…the fact that long-term Treasury bonds have defeated the best equity market in the world over the past 18 months, especially since September [2018].”

So, according to Morgan Stanley, we are in the middle of the bear market.

The previous bear markets

But there is no difference from the first four months of this year. We had a bear market rally. Yes, it came like a storm but a very long one. It was Christmas when the 25% rally started and ended on May 1 when the all-time highs were recorded. But all benefits from that short bull market period was gone with the wind. The bulls were so close, but still incapable to make a change.

Morgan Stanley is right. Since October 2018 we are in a bear market. At the time of the mentioned rally, all had some hope based on historical performances. The fact is that some of the biggest rallies have happened throughout bear markets. But not now.

The bottom line

What you have to pay attention to is the overall trend. It will show you the right spot. The best way to do that is to use the long-term charts to set your trading correctly. Anyway, there is no good or positive prediction. Be ready to see the large bear rallies, there will be a tremendous loss. Having this information in your minds, you will know what to do and how to stay objective. Over one century, we had 32 bear markets and 123 market corrections.

The bear market lasts shorter than bull markets. So, this one will pass.

14th August 2019
Asian Stock Markets Perform Careful Increases
2 min read
- Asian stock markets recorded substantial increases
Asian stock markets carefully raised in early trading Monday. The previous week was volatile for overall markets because the U.S.-China trade tensions escalated.

According to Goldman Sachs, a trade deal is pretty much impossible before the 2020 US presidential election. This US multinational investment bank cautioned that the open-ended trade war has a bigger influence on the U.S. economy than expected. In a letter to investors, this bank lowered its growth forecast for the market movements. Also, it warned the risk of recession is growing. The reason behind is the companies are reducing spending which is, of course, caused by trade-war risks.

Yesterday, 11/08/2019 Monday, China’s central bank set the yuan lower than 7 per U.S. dollar. The value is the same for the past three days. The People’s Bank of China set the currency’s reference limit at 7.0211 per dollar. That is lower than the level on Friday. The analysts had expected an even lower point.

According to MarketWatch:

“Hong Kong’s Hang Seng Index HSI, -0.18% gave up early gains and was last about flat, while the Shanghai Composite SHCOMP, +1.45% gained 0.7%. South Korea’s Kospi 180721, +0.23% advanced 0.4%, while Taiwan’s TaiexY9999, -0.21% was about flat and Indonesia’s JSX Composite JAKIDX, -0.40% declined slightly. Australia’s S&P/ASX 200 XJO, +0.09% was little changed. Markets in Japan and Singapore were closed for holidays.”

Some individual stocks like Sunny Optical and Tencent raised in Hong Kong, but HSBC 5 fell. Samsung and SK Hynix increased in South Korea, in contrast to Rio Tinto that slipped in Australia.

President Donald Trump statement

The increases in Chinese stocks followed the U.S. President Donald Trump statement on Friday that he is “not ready to make a deal.”

“China wants to do something, but I’m not doing anything yet,” Trump told Breitbart. “Twenty-five years of abuse. I’m not ready so fast.”

In Trump’s opinion, as he said, it would be “fine” if the negotiation between the two countries planned for September, were “called off”.

Meanwhile, China fixed currency’s reference limit at 7.0211 per dollar which is lower than the 7 expected value.
Some very important data will come on Wednesday from China. On the first place, information on industrial production, retail sales, and the jobless rate.

That will be interesting because Cathay Pacific Airways Limited (HK:0293) fell more than 4% just because China blamed it that its employees participated in anti-Beijing protests. Well, the pilot is suspended.

There is Huawei too

President Trump told CNBC that the U.S. administration will not have any relations with Huawei as the trade war proceeds to increase.

“We are not going to do business with Huawei. … And I really made the decision. It’s much simpler not doing any business with Huawei. … That doesn’t mean we won’t agree to something if and when we make a trade deal,” Trump told CNBC.

Speaking about Asian stock markets we cannot avoid Chinese tech stocks.

The accepted opinion is that they should lag the rest of the market. That opinion supports Ari Wald, head of technical analysis at Oppenheimer.

“We think the opportunity is on the U.S. side — U.S. tech — and we think the risk is in China tech,” Wald stated on CNBC’s “Trading Nation. ” and added “the S&P 500 is breaking out to the upside. We see this as the resumption of U.S. leadership.”
12th August 2019
Binance Security Warning For Its Crypto Users

2 min read

Binance security warning was issued for crypto exchange users. The world’s largest cryptocurrency exchange warned users that they are investigating the possibility of leaking of verification data, reported Forbes. That could hit up to 60,000 users who gave personal identification data to Binance during the last year, also Coindesk reported.

According to Binance security warning, a hacker announced to hold 10,000 photos of users that have some connections to the exchanges know-your-customer data. KYC is a legal demand by financial companies to prevent money laundering and fraud. It is an obligation for all customers who want to trade, deposit or withdraw funds. Every customer has to provide such information for this cryptocurrency exchange.

The Bitcoin and cryptocurrency exchange, which is based in Malta, announced it was blackmailed by the hacker. The hacker was demanding $3,5 million worth 300 bitcoin. Binance revealed the “inconsistencies”. They compared the hacker’s data to the data in its system, and found “no evidence has been supplied that indicates any KYC images have been obtained from Binance.”

How the leaking was revealed

This data was distributed on an unnamed group on app Telegram. Binance’s reaction isn’t surprising: “by joining or spreading the link of the Telegram group, you are helping malicious hackers (at least giving attention). What we should do as an industry is to fight them. Stay on the positive side. Report the group, then leave.”

Binance has offered a 25 bitcoin prize worth $290,000 for the information that could reveal the hacker’s identity.

Security warning for crypto exchange is not rare

Bitcoin exchange hacks and security cracks are not so rare. Still, it is a relatively common problem. Exchanges are working on fixing that issue but the success isn’t always the best.

One of the problems is that the bitcoin price always drops when it comes to a situation like this one. Losing users data is an enormous problem. The security is most important for every single crypto exchange if they want to keep their coins safe and have more customers.

Binance is under hacker’s attack and blackmailed as well.

So, the arising question is if such an exchange, the world’s largest by trading volume, is hacked and has a security problem, what we can expect from the smaller ones?

Binance has engaged a third-party

The most surprising fact is that hacker didn’t hack Binance’s system to collect data. According to a statement by Binance CEO CZ, the data was collected from an outsourced company.

The leaked data is linked to an engaged company. Last year Binance outsourced some company to handle user data sent through the KYC system.

The consequence of a security problem

The data leak could force users, back to use sites that allow them to obtain cryptocurrency but without giving any personal data, or at least the minimum of it.

Data leaking was already a problem to Facebook, Yahoo, Capital One Financial Corp. We experienced it.
Crypto exchanges are hacker’s targets for a long time. Sometimes they would require coins, sometimes they would collect customers personal data. During the past 10 years, almost $1,5 billion has been stolen.

What all users of cryptocurrency exchanges want is to be anonymous and safe as much as their coins. That’s all. The exchanges must guarantee that. Otherwise, the nature of crypto will be damaged.

9th August 2019
Pound falls on the UK PM’s threats
3 min read
- GBP reached a record low against the Euro.
- Pond falls against the US dollar too.
Boris Johnson, the new UK Prime minister refused to reconsider his threat to leave the European Union with “no-deal Brexit”. This decision already has a negative influence on the pound and pound falls.

GBP reached a record low against the Euro.

But the pound falls and GBP is under great pressure according to latest reports. It fell against the US dollar too.

The pound-to-euro exchange rate is quoted at 1.0853, the pound-to-dollar exchange rate at 1.2161. This level wasn’t noticed since October 2016. The date when former Prime Minister Theresa May declared her plan to trigger divorce from the EU. It is a clear sign that sterling fell to an almost-three-year low as no-deal Brexit worries rise. And now, pound falls more.

Johnson “isn’t bluffing”

The ‘no deal’ Brexit will happen on October 31. The reports came after a meeting on Monday between European Commission officials and Brexit diplomats.

The Guardian and The Telegraph cited unnamed EU diplomat who said that “no deal’ Brexit appears to be the UK government’s “central scenario”. Both media reported the EU is taking this situation as “[their] working hypothesis is ‘no deal’.”

The investors are worried about Johnson’s stance. His “no-deal Brexit” thinking isn’t a good signal for them. Rehan Ansari, the currency expert at Caxton FX, commented for Express.co.uk the current exchange rate developments.

“The data, however, was not enough to get the Pound off the back foot. GBPEUR printed a new low at 1.0819, a level not seen since August 2017,” pointing out that “any volatility will likely be influenced by politics”.

The market expectations

The market expects a ‘no deal’ Brexit scenario, it is obvious. The forex strategists are seeking to set the levels that the British pound might be aiming. Some of them gave some numbers and found an alternative answer. Forex strategist Jordan Rochester said the GBP will settle at “hard Brexit equilibrium”. This is recognized as the level where the UK’s accounts would begin to balance themselves.

The main issue for the UK is that it is reaching a historically high deficit. In the first quarter of this year, it was at -5.6% of GDP. The consequence is that the UK imports goods and services more than it exports. That is an outflow of currency.

But there are some optimistic opinions. For example, Robert Halfon, a conservative politician, has faith that the drop of the pound will give more profit to exporters and boost British tourism.

“Hopefully holidaymakers will choose GB as a holiday destination,” he stated. Britons think it would be nice if it would be the truth. The truth is that leaving the EU may have a bad influence on the UK economy and national currency. But there is almost no chance for that to happen, as it is evident from Bank of England’s predictions of 1-in-3 chances for post-Brexit recession.

Clearly Departing

Johnson said many times that he’ll lead the UK out of the EU on Oct. 31. With or without a deal. Moreover, he has directed government departments to develop the plans for this divorce from the EU until the Halloween deadline. Johnson personally is going all over the country searching for wider support for his plans.

“If they can’t compromise, if they really can’t do it, then clearly we have to get ready for a no-deal exit, and I think we’ll do it,” Johnson said. “It’s up to the EU, it’s their call.”

The investors’ concerns

If the UK leaves the EU with a ‘no deal’ the country could be faced with dry-out of investment capital. The investors are cautious, and they could leave the pound ‘high and dry’.

The UK internal capital depends on outside capital. But the balance may be established. If pound drops more that would decrease the incentives to import. At the same time, it would increase the incentives for export. Hence, achieving a balance.

The pound falls as markets raise expectations of the new political risks and a ‘no deal’ Brexit on October 31.
7th August 2019