Sterling Rises After May Receives Support from Key Ministers
|In the United Kingdom, Brexit uncertainties continued today as EU’s chief negotiator, Michael Barnier warned that there will be difficult negotiations over the UK’s demands to maintain access to EU’s security database. He also asked UK politicians to accept the deal, saying that the two sides had made major concessions.
Theresa May received some support from Liam Fox and Michael Gove, two were key figures of the leave campaign who currently serve as Secretary of State for International Trade and Secretary of State for Environment, Food and Rural Affairs respectively. In a statement, Fox said that while he opposed many parts of the draft, it was better than leaving the EU without a deal. The FTSE 100 declined by 70 basis points while sterling was largely unchanged. This was the worst week for sterling since August.
Gold rose today as volatility surrounding Brexit and the risks about the stock market continued. As a safe haven, gold tends to move up when there are risks. The gain also came after North Korea tested an ultramodern tactical weapon. This was the first major test of a weapon after Kim’s meeting with Trump in Singapore and could possibly explain why the Japanese yen climbed against the USD today.
The euro declined slightly against the USD after the EU released inflation numbers for October. During the month, the CPI increased by 2.2% as expected. This was higher than the 2.1% increase in September. On a MoM basis, the CPI increased by 0.2%, which was in line with expectations. The core CPI rose by an annualized rate of 1.1%, which was in line with expectations. In a statement at Frankfurt, Mario Draghi remained upbeat about the economy but warned that policy makers will continue to be on guard in the coming months.
The EUR/USD pair fell slightly today against the USD after the CPI numbers were released. Nonetheless, the pair is continuing with the upward trend started on Monday when it was at the 1.1213 level. The moving averages and the Parabolic SAR indicators point to a continuation of the upward trend. This is confirmed by the RSI and the MACD indicators. However, this could change depending on the news that emerges during the weekend.
GBP/USD
The GBP/USD pair moved slightly higher after Theresa May received some support from her members of cabinet. It reached an intraday high of 1.2850. This was higher than yesterday’s low of 1.2720. The upward trend seemed to be heading to the 38.2% Fibonacci Retracement level of 1.2880. Signs of a continued upward trend were shown by the double EMAs, which started a crossover. Over the weekend, it is likely that more Brexit news will influence the movement of the price.
XAU/USD
Gold continued the upward trend started on Tuesday. The price has moved from a low of $1196 to today’s high of $1218. The XAU/USD pair is now trading at 1218, which is the highest level since Monday this week. The upward trend is supported by the double EMAs, which are pointing to more upward movements. The RSI was unchanged and is currently at 63. If the upward trend continues, the pair will likely test the important support of 1230.
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