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Discretion is the better part of valour. Caution is preferable to rash bravery. Falstaff’s words probably can be applied to markets as we head into the year-end. For sterling traders today we have the double spectacle of the Queen’s Speech and the Bank of England meeting. Caution and discretion will be the watchwords for the Monetary Policy Committee; less so the government’s likely agenda.

GBPUSD has been steady at 1.3080 but we are seeing a bit of bid for the pound early doors with cable taking a 1.31 handle again to print 1.3170.

The Bank of England decision is today at midday, with no change expected. We could see a dovish bias as the MPC catches up with the market. Market odds of a cut next year have jumped from about 30% last week to more than 75% today. Two dissenters called for a cut last time around, so there is  the intellectual basis to cut rates.

Nevertheless, with the election still not cold, and a new governor about to appointed, the MPC will prefer to wait until 2020 and a little more surety before it cuts. Moreover, the added uncertainty that we see – reflected in the pound movements over the last week – from the PM’s decision to shackle the government to leaving the transition period by Dec 2020 come what may, means the BoE will demur.

It is a sign of the times when the impeachment of the president of the United States produces nothing but a shrug. By becoming only the third president in history to be impeached, Mr Trump joins a select club. Markets simply don’t care.   

The Republican-controlled Senate will never abandon their president. Democrat speaker Nancy Pelosi has suggested she may delay sending the letters of impeachment up to the Senate, but this is posturing. The impeachment process has and remains so partisan that Mr Trump will not be removed from office.  

Yesterday, the S&P 500 closed a little lower having earlier attempted to break into fresh record territory. Europe was mixed: the FTSE 100 closed up 0.2% at 7540, while the DAX was down 0.5% at 13,222.  

On Thursday, Asia has also retreated a touch from an 18-month high. Data is offering little in the way of a catalyst and with a trade deal baked in, further upside may be tricky in 2019 as traders book profits and start to focus on Jan 2020. 

European markets are set to open flat as investors weigh the balance of risks and probably start to think that now might be a good time to park some profits. 

Overnight, China’s finance ministry has set out six products from the United States that will be exempt from tariffs starting Dec. 26th. Across the wires as I write China says it is close communication with the US on singing the phase one deal and that details of the deal would outlined once it is signed. 

Australian jobs data was strong at +39.9k vs 14.5k expected and a big turnaround from the prior month. Just a little bit of help for the Aussie, which has risen steadily overnight. AUDUSD based at 0.6850 late last night and has marched through to 0.68825. 

Elsewhere, US yields are higher, with 10s striking 1.927%. The dollar index also advanced. The combination is troublesome for gold bugs – gold has trended sideways now for days and seems locked around $1477. Oil got a boost from the US inventory data, with a spike towards $61 from $60.30 just about holding at $60.85. Inventories showed a draw of 1.1m barrels vs 1.5m expected. 

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