Pound clings onto false hope

5 December, 2018

The battered Pound was thrown a lifeline today after the European Court of Justice Advocate General Campos Sánchez-Bordona stated that Britain can unilaterally revoke its decision to leave the European Union.

Sterling’s aggressive appreciation to this news continues to highlight how explosively volatile and extremely sensitive the currency has become to Brexit headlines. Although the European Court of Justice may allow the United Kingdom to take a U-turn on Brexit, investors need to consider whether this is a realistic option for the UK government. With the government seen respecting the results of the Brexit referendum and vote to leave, this noise over the UK possibly withdrawing article 50 is poised to fade away.

It will most likely be another rough, rocky and unpredictable trading week for the Pound as anticipation mounts ahead of the Parliamentary vote on Brexit. With pessimism in the air over Theresa May’s Brexit deal being squarely rejected by Parliament, appetite towards the Pound is seen diminishing further.

Focusing on the technical picture, the GBPUSD is staging a rebound on the daily charts with prices trading marginally above 1.2810 as of writing. While Sterling has scope to edge higher in the near term with Dollar weakness supporting upside gains, the longer-term trajectory still points to the downside. With the Pound’s outlook for the rest of 2018 hanging on Parliament’s Brexit vote, the next few trading days will certainly be eventful. If the 1.2850 level proves to be a stubborn resistance, the GBPUSD has scope to descend back towards 1.2700.

Dollar extends losses as Treasury yields fall


Falling U.S Treasury yields, a US-China trade truce and speculation over the Fed potentially taking a break on rate hikes in 2019 have offered nothing but bad news to the Dollar.

Although there seems to be a sense of uncertainty over what the United States and China agreed on over the weekend, investors still remain cautiously optimistic over trade tensions easing in the short to medium term. If this week’s pending U.S jobs report for November is unable to match market expectations, the Dollar is at threat of extending losses with 96.10 acting as the first point of interest.

Gold jumps to one month high


Gold has entered December on an incredibly bullish note with prices currently trading at levels not seen in over one month, above $1,238.

With the Dollar facing multiple headwinds in the form of falling U.S Treasury yields and a Fed that seems to be adopting a dovish tone, this is all good news for zero-yielding Gold.  Today’s aggressive appreciation continues to highlight how the yellow metal remains primarily influenced by the Dollar’s performance. Focusing on the technical picture, Gold is bullish on the daily timeframe as there have been consistently higher highs and higher lows. A solid breakout above the $1,240 resistance level may open a path towards $1,248.


Source link  
Pound steady after May defeat

Investors were thrown onto an emotional rollercoaster ride yesterday evening as Sterling rallied across the board despite Theresa May's historic...

Emerging market currencies gain

The Dollar tumbled against a basket of major currencies on Wednesday evening, after minutes from the latest FOMC meeting revealed policymakers adopted a more cautious approach towards raising interest rates.

Risk appetite returns on trade optimism

Financial markets kicked off the trading week on a positive note as optimism over US-China trade talks revived investor risk appetite. Asian equity markets...


Will investors sell everything in 2019?

The first trading session of the new year has very much picked up on how global financial markets were seen wrapping up 2018, with...

Apple woes trigger FX flash crash

If market participants needed any further guidance that 2019 is shaping up to be the year where investors are preparing to sell everything, then all that...

Gold shines brightly on risk aversion

It has been an incredibly bullish trading week for Gold thus far with prices hitting a 6 month high thanks to Dollar weakness and heightened political...


Hopes for rally fade on market caution

A sense of caution and unease continues to linger across financial markets this morning as jittery investors brace for the Federal Reserve's interest...

Pound rally living on borrowed time

Sterling bulls were clearly in the driver's seat today despite Brexit related uncertainty and ongoing political drama in Westminster leaving investors on edge...

What to expect from Fed meeting?

December 2018 has so far been one of the ugliest Decembers in U.S. stock market history. The S&P 500 declined 7.8% in 10 trading days and...

  


Share: