GBP falls on weak retail sales and no-Brexit risk

The British pound declined against most currencies as traders reacted to the rising possibility of a no-deal Brexit. In a statement yesterday, Boris Johnson pressed the European Union to make concessions on the delicate issue of fisheries. He lamented that if the UK agreed to the EU’s terms it would be the only country in the world without full control of its territorial waters. The pressure is on as time is running out for the two sides to reach an agreement by 31 December. The pair also reacted to the weak retail sales from the UK. The data showed that overall sales and core retail sales rose by 2.4% and 5.6% in November. That was lower than the previous increase of 5.8% and 7.8%.

The euro gained against most currencies after strong economic numbers from the European Union. According to the ifo Institute, the German business expectations, current assessment, and business climate rose to 92.8, 91.3, and 92.1, respectively. That was better than what most analysts were expecting. This improvement happened as more company executives remained optimistic about the economy thanks to the Covid vaccine. Further data showed that the German PPI increased by 0.2% in November. 

The price of crude oil hovered near their March highs as traders remained optimistic about demand. That happened as the Food and Drug Administration (FDA) is expected to approve a vaccine shot developed by Moderna. This vaccine will be easier to transport and less expensive than the one developed by Pfizer. Analysts believe that the vaccine will help boost demand for crude oil since it will lead to more travelling. Later today, the price will react to the latest rig count numbers from Baker Hughes.

EUR/USD

The EUR/USD price is hovering near its highest level since April 2018. On the four-hour chart, the price is slightly above the two lines of the envelopes indicator. It is also above the 25-period and 14-period weighted moving averages while the accumulation/distribution indicator has continued to rally. This is evidence that more money is still in favour of a stronger euro. Therefore, the pair will possibly continue rising, with the next short-term target being at 1.2260.

GBP/USD

The GBP/USD pair dropped to an intraday low of 1.3482. On the four-hour chart, the price struggled to move below the 25-period and 15-period moving averages. Also, the on-balance volume indicator continued to rise while the money-flow index moved from the overbought level of 85 to the current 52. It is also slightly higher than the ascending trendline that’s shown in yellow. The pair will likely bounce back during the American session, with the next target being at 1.3550.

XTI/USD

The XTI/USD pair rose to an intraday high of 48.36, which is the highest it has been since March. On the four-hour chart, the price is above the important support at 46.35 and the short and medium-term moving averages. The RSI is slightly below the overbought level of 70 while the Average True Range (ATR) has started to drop, which is a sign that volatility is falling. Therefore, the pair will likely continue rising as bulls eye moves above 50.00.