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UK Prime Minister’s position has weakened further last night in a show of strength from parliament, the House of Commons voted 303 to 296 in support of an amendment to the Finance Bill, which would limit the scope for tax changes following a no deal unless authorised by MPs. No 10 stated that PM May’s defeat is “inconvenient rather than significant”, it mainly weakens her position towards the EU as it reduces room for her to manoeuvre and negotiate. The vote also suggests that British politicians are becoming more aware of the dangers that a no-deal would cause, as the Bank of England and many economists and business groups have already warned against. The pound remained stable, trading this morning just above 1.11 against the euro. The GBP/USD pair continues to trade around the 1.2750 mark, ahead of a speech from the Bank of England’s governor, Mark Carney at 3.30pm. Later on, the US FOMC’s latest Meeting Minutes will be published at 7pm, followed by a live press conference with Federal Reserve Bank chair Jerome Powell.
Both Chinese and American officials have announced that trade talks have now come to an end and a trade agreement could be expected very soon. If a trade deal isn’t agreed by March 1st, the US will hike tariffs on USD200bn worth of Chinese goods, up from 10 per cent to 25 per cent.
The single currency strengthened this morning after unemployment figures in the Euro area hit a new 10-year low: the jobless rate dropped to 7.9 per cent in November, down from 8.0 per cent the previous month (October 2018) and from 8.7 per cent a year ago (November 2017). The even better news is that the lowest unemployment rates in November 2018 were recorded in Czech Republic (1.9 per cent), Germany (3.3 per cent) and the Netherlands (3.5 per cent), which should reassure economists following a worrying drop in German industrial output yesterday.
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