31 January, 2019
The Pound suffered sharp losses yesterday after an unforgettable night of votes in the British House of Commons revived fears of a ‘no-deal’ Brexit scenario.
Sterling was an easy target for bearish investors after MPs voted against the Cooper amendment that would have provided a safety net against a ‘no deal’ outcome. Although the passing of the Brady amendment came as a win for Theresa May, this proposal was immediately rejected by the European Union. With less than two months until the official Brexit divorce date and Brussels warning that the backstop is “not open for renegotiation”, the odds of an extension to Article 50 are rising. While this scenario has the potential to support the Pound as investors completely discount fears of a ‘no deal’ Brexit, the continued uncertainty will most likely cloud the currency’s medium- to longer-term outlook.
Taking a look at the technical picture, the GBPUSD is nursing its wounds today with prices trading marginally below 1.3100 as of writing. Although the trajectory points to further upside, Brexit developments have the ability to overshadow the technicals. Bulls have the ability to push prices back towards 1.3220 as long as 1.3000 proves to be reliable support. Alternatively, a breakdown and daily close under the psychological 1.3000 level is likely to invite a decline towards 1.2940.
Across the Atlantic, much attention will be directed towards the FOMC meeting this evening which is expected to conclude with monetary policy being left unchanged.
Investors will be paying extra attention towards the language in the policy statement to see whether the Fed signals a pause in rate hikes. With the US government shutdown delaying the release of important economic data and uncertainty over trade talks weighing on sentiment, it may be tricky assessing how the US economy has performed. Although the Dollar continues to benefit from safe-haven flows, buying sentiment is seen taking a hit if the Fed sounds more dovish than expected.
Focusing on the technical picture, the Dollar Index is under pressure on the daily charts. Sustained weakness below 96.00 is likely to encourage a decline back towards 95.50 and 95.28, respectively.
It has been an incredibly positive trading week for Gold thus far thanks to market caution and investors clearly avoiding riskier assets in favour of safe-haven investments.
For as long as US-China trade tensions, concerns over slowing global growth and Brexit drama continue to weigh on risk appetite, Gold is seen shining throughout the trading week. The zero-yielding metal is poised to receive a welcome boost if the Federal Reserve adopts a dovish tone. With the fundamentals driving Gold marrying the technical, we see vast upside potential. The daily close above $1,308 is seen opening a path towards $1,316 and $1,324, respectively.
The mood across global equity markets brightened on Wednesday morning following reports that the United States and China were...
Dollar bulls were missing in action this morning as the improving mood across financial markets sent investors towards riskier assets.
The end of the trading week is wrapping up to be an unsuccessful one for Gold buyers, after the Yellow Metal surprisingly slipped through...
A storm is brewing across Turkey's financial markets as the nation desperately struggles to contain another Lira crisis. Turkish authorities have taken...
Gold prices have managed to achieve a rebound from the sub-$1,290 levels seen earlier this month to challenge $1,305 at the time of writing...
Oil prices have performed unexpectedly well this quarter, rising roughly 29.5% YTD despite US-China trade developments, global growth concerns...
U.S. stocks posted their best weekly performance last week, sending the S&P 500 above the critical resistance level of 2,815. Equity bulls may see the break...
Financial market sentiment has been evidently jabbed in the past couple of trading sessions by concerns over the downbeat tone delivered by...
Asian stocks traded mixed this morning as investors adopted a 'wait and see' approach due to a lack of fresh catalysts. With much of the...