Sterling shows solid upturn

Posted 04 December, 2018

The sterling is on the rise on Tuesday. The bulk of the support is definitely coming from weaker US dollar encouraging sterling to hit new highs. As for the greenback, the American currency is depressed now by lower state-bond yield, which can be a sign of upcoming recession in the USA. Today, the sterling-to-US dollar exchange rate soared above the 1.28 handle for the first time since late November. Moreover, the currency is trying to take roots on this level with the current price standing at 1.2826. The market has got several reasons for buying. In particular, the UK construction sector brought a surprise showing strong performance in November. The PMI hiked to 53.4 over the period under review, whereas the forecast was set at 52.5. 

Additional upturn driver was the message of the advocate general of the European court saying that London can refuse from Brexit on a unilateral basis until the court makes a final determination. However, this scenario is unlikely to happen, but this move bolstered the sterling.

Nevertheless, the market may not rush to buy sterling, since its major challenge is ahead. In particular, the Brexit vote in the UK Parliament is slated for December 11. After that Theresa May can face unconfidence vote, so with persisting risks, the sterling is still attractive for sales on the rise. This means that the observed recovery may be a good chance for profit taking before these events.

Previous forecast

05 December, 2018 12:45

← Oil weaker on unclear signals

After a healthy start of the week oil prices failed to maintain recovery on Tuesday. The market is strongly affected by growing uncertainties on the upcoming meeting of the OPEC members along with generally unstable financial markets in the world. As a result, Brent prices hit $63.55/bbl, but then collapsed. As of Wednesday, the bearish trend persists and the 61 handle seems to be the target during the morning trading.

Oil weaker on unclear signals

Next forecast

03 December, 2018 18:32

US dollar probably under short-lived pressure →

The US dollar has taken a protective position vs the majors at the start of the week. Sales improved mainly driven by the progress in the US-China trade talks that were observed during the G20 summit held in Buenos Aires last week. During the event, the parties managed to agree on a 3-month break, which in its turn gave grounds to expect a possible settlement of this dramatic trade conflict. The additional pressure on the greenback as a protective asset is coming from the agreement achieved by Saudi Arabia and Russia regarding oil production restriction, which in its turn supported demand for high-margin assets including oil.

US dollar probably under short-lived pressure
Write a comment
Prove you’re not a bot + 6 = 12