Sterling was the talk of the town across currency markets for all the wrong reasons during Monday’s trading session, thanks to mounting political uncertainty in the United Kingdom.

The Sunday Times newspaper reported over the weekend, that as many as 40 Conservative MPs have agreed to sign a letter of no-confidence in Theresa May. Although this was eight short of the signatures needed to trigger a formal leadership challenge, this is likely to add to the bucket load of uncertainty, translating into more pain for the British Pound. With political instability at home stimulating concerns over May’s ability to govern and deliver Brexit, Sterling may have a very rough and rocky road ahead. The price action suggests that sentiment towards the Pound remains bearish, despite November’s rate hike. Further downside is likely to be on the cards, on the back of political jitters and Brexit risk.

Taking a look at the technical picture, the GBPUSD has stumbled into the trading week under noticeable selling pressure, with bears eyeing 1.3050. Technical lagging indicators such as the MACD and 50 Simple Moving Average, both point to further downside. A decisive break down below 1.3050 may encourage a further decline towards 1.3000 and 1.2960, respectively.

GBPUSD

Dollar hovering around 94.50

The Dollar appreciatedslightly against a basket of currencies on Monday, as investors continued to ponder over the fate of the proposed U.S tax reforms.

With the Greenback becoming increasingly sensitive to expectations of proposed U.S. tax reforms, any positive, or negative, news on these developments has the ability to spark volatility. Focusing on the technical picture, the Dollar Index is under some selling pressure on the daily charts. Sustained weakness below 94.40 may encourage a further decline lower towards 94.00. In an alternative scenario, a breakout back above 94.70 may trigger an incline towards the 95.10 resistance.

Commodity spotlight – Gold

A firmer Dollar,coupled with expectations of a rate hike by the Federal Reserve in December,may have slightly obstructed Gold’s recovery during Monday’s trading session, with prices trading below $1280 as of writing.

This yellow metal remains a battleground for bulls and bears and as such, is likely to translate into prices trading in a wide range. While bulls may find support from political risk and geopolitical tensions, bears are poised to be inspired by expectations of higher U.S. interest rates and a stabilizing Dollar. With the economic calendar fairly light today, price action may dictate where the yellow metal trades. From a technical standpoint, previous support around $1280 has the ability to transform into a dynamic resistance that triggers a decline back towards $1267. Alternatively, a breakout above $1280 could open a path towards $1289 and $1300, respectively.

XAUUSD

Disclaimer:This written/visual material is comprised of personal opinions and ideas. The content should not be construed as containing any type of investment advice and/or a solicitation for any transactions. It does not imply an obligation to purchase investment services, nor does it guarantee or predict future performance. FXTM, its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness of any information or data made available and assume no liability for any loss arising from any investment based on the same.

Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 90% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Analysis feed

Latest Forex Analysis

Editors’ Picks

GBP/USD off 7-month highs, still firmer as Tories hold the lead

GBP/USD retraces from the new seven-month highs of 1.3180 but remains strongly bid, as weekend polls have reaffirmed a solid lead for PM Johnson's Conservatives. Cable dropped on Friday amid upbeat US data.

GBP/USD News

EUR/USD steadying above 1.1050 amid upbeat German export data

EUR/USD is trading above 1.1050, attempting a recovery after Germany reported an increase in exports in October. EUR/UDS dropped sharply on Friday amid upbeat US Non-Farm Payrolls and weak German industrial output. 

EUR/USD News

Forex Today: US-Sino trade tensions prevail, Boris closer to victory, EUR/USD licking its wounds

Trade talks: President Donald Trump has called on the World Bank to stop lending to China, a move that may aggravate tensions, with only six days to go until Washington is set to slap new tariffs on Beijing. Negotiations continue.

Read more

Gold: The set-up seems tilted in favour of bearish traders

Gold regains some positive traction amid persistent trade uncertainty. The upside is likely to remain capped ahead of the FOMC policy update.

Gold News

USD/JPY: tensions between Washington and Beijing back the JPY

Japanese Q3 Gross Domestic Product doubled the market’s expectations, up by 0.4%. The US calendar has nothing to offer today, attention focus on Washington-Beijing relationship. USD/JPY pressuring the post-NFP low, decline to accelerate once below 108.40.

USD/JPY News

Forex Majors

Cryptocurrencies

Signatures