It's been quite a 24 hours for the leaders of the US and UK and investors are certainly getting excited about what's to come next.

Boris Johnson's knockout performance in the UK election on Thursday has paved the way for the UK to leave the EU on 31 January and forge closer ties with its oldest ally. The victory exceeded expectations, with the polls having narrowed in the days leading up to the vote and Boris now has a strong mandate to leave next month and the numbers to do so.

The exit polls gave an immediate boost to the pound which had been rising in anticipation of a majority Conservative victory in the week or two before the election. The result reduces a huge cloud of uncertainty for the UK but there's still a long way to go, with the next phase widely being regarded as the more difficult. Still, it was a huge victory for Boris and the Conservatives and enables him to, in his words, get Brexit done.

It doesn't take a genius to guess which companies are flying this morning after that election result. Remove the threat of nationalization and investors quickly flock back to the BT's, Royal Mail's and National Grid's of the world. And there's plenty more. Investors in these companies will be breathing a huge sigh of relief this morning.

 

Trump steals Boris' thunder

Not to be outdone, Trump looks poised to sign a phase one trade agreement with China ahead of the tariff deadline this Sunday. Reports suggest a deal will delay the imposition of tariffs and halve those on $360 billion that have already been imposed. That's a significant concession and suggests we're about to see a major de-escalation in the trade war.

While markets are trading higher on the back of these reports, there is an element of caution about the moves we've seen so far. Investors have been too eager before to buy into a trade deal and may be a little reluctant to be so again but should this get over the line, this year's Santa rally may really take off.

 

Gold turns south as trade deal nears

Gold is enjoying a bit of a bounce this morning after coming under considerable pressure on the back of the trade deal reports. It had previously come close to $1,490 but now finds itself closer to $1,470 having dropped as low as $1,462. Despite the bullish pressures over the last week or so, gold continues to look vulnerable and, if a trade deal is signed, that isn't going to help it.

 

Oil buoyed by trade reports

Oil prices are understandably on the rise on reports of a trade deal between the world's two largest economies. Having gained so much already though over the last few months, it is struggling to scale new highs. It may get an extra lift if reports are confirmed to be true but we may see a little "buy the rumour, sell the fact" action, especially if momentum indicators don't support any rally.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities.

Opinions are the authors — not necessarily OANDA’s, its officers or directors. OANDA’s Terms of Use and Privacy Policy apply. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Analysis feed

FXStreet Trading Signals now available!

Access to real-time signals, community and guidance now!

Latest Analysis


Latest Forex Analysis

Editors’ Picks

EUR/USD trims intraday gains returns to mid-1.17

The EUR/USD pair retreated after flirting with the 1.1800 figure, as the market mood somehow turned sour. Focus on the next US fiscal relief package, coronavirus, and economic progress.

EUR/USD News

GBP/USD approaches 1.3000 once again

GBP/USD is easing towards weekly lows as dollar bulls are giving it another try. Brexit concerns and UK lockdowns in the eye of the storm.

GBP/USD News

XAU/USD bull-bear tug-of-war extends around $1975

XAU/USD sidelined heading into the European session. Downside limited by dollar weakness, coronavirus concerns. Focus remains on the USD dynamics and the United States/China updates.

Gold News

What you need to know about trading in August

The generally received wisdom is that summer is a quiet month for trading. Traders are on holiday and markets quieten down. That’s the expectation among many. However, the reality is that August can be one of the most volatile trading months of the year.

Read more

WTI: Bulls await API data to attack $41.00

WTI struggles to extend recovery moves from $40.74 beyond $41.00. Virus woes join OPEC output increase to combat drop in Russian oil production. US Factory Orders, API inventories will be the key.

Oil News

Forex Majors

Cryptocurrencies

Signatures