Brexit developments are hogging the headlines at the moment and the British pound is dropping like a stone.
There’s a lot keeping markets cautious at the moment including: the recent decline in the oil price, Apple’s share price fall, the US political gridlock following the mid-terms, China’s slowing economic growth, expected US rate hikes and continuing US/China trade tensions.
Then on top of this, the focus last week was on the UK and the political chaos over the Brexit withdrawal agreement. The resignation of six Tory ministers in protest last week and talk of a no confidence vote against PM Theresa May has seen the British pound lose over 2 pence against the US dollar, Euro and even the AUD.
All this is leading to caution with investors moving into risk adverse asset classes with equities and bond yields falling and the US dollar strengthening – although our AUD is holding up well thanks to some positive economic data and trading well above 72 cents.