The FTSE bounded higher on Thursday, latching on to improved global sentiment. Investors anxiety over the US – Sino trade war is easing, and risk appetite is cautiously returning. The weaker pound and stronger oil prices also offered support to the FTSE, which lagged only behind the trade sensitive Dax.

Yesterday the markets learnt that President Trump was willing to put off slapping tariffs on EU auto imports for six months. Whilst this boosted German car makers, investors are also reading between the lines. The assumption is that Trump is only looking to deal with one trade war at a time. The fact that he put off a decision on EU tariffs for six months has been interpreted by traders that the US – Sino trade dispute will be all tied up by then. This explains the second day of gains even as Trump put Huawei on an exports blacklist. As investors carefully put risk back onto the table, the safe haven yen dropped versus the dollar. Gold tumbled 0.5%.

Pound hits fresh 3 month low

Sterling extended losses on Thursday, which now total 1.5% across the week. Add these losses to the previous week's 1.3% tumble and the pound is looking very unloved.

Theresa May will attempt to push her Brexit deal through Parliament at the beginning of June. With Labour refusing to support the deal in its current state, the chances of Theresa May achieving her goal are extremely slim. Should she fail for a fourth time to get the necessary support for her Brexit withdrawal agreement, then it looks as if her time is up.

The concern for the pound is who comes next? A hard-line Brexiteer is the most probable candidate, meaning hopes of a softer version of Brexit are fading quickly. It is no coincidence that the pound fell as Boris Johnson announced that he was ready to pounce into Theresa May's position should it become available.

Oil rallies on middle eastern tensions

Oil rose for a third straight session on Thursday as tensions in the Middle East remain elevated. Concerns over supply disruptions are offering support to oil, pushing crude back towards $63. Brent rallied 1.4% and is on track for its biggest weekly increase in six weeks. Not only has Saudi Arabia experience sabotage attacks on oil pumping stations and tankers, the US also withdrew embassy staff from Baghdad over perceived threats from Iran. Supply in the oil market is already tight, so these headlines are ensuring the bulls stay in control.

CFD and forex trading are leveraged products and can result in losses that exceed your deposits. They may not be suitable for everyone. Ensure you fully understand the risks. From time to time, City Index Limited’s (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material. As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed

Analysis feed

Latest Forex Analysis

Editors’ Picks

EUR/USD: Under pressure below 1.1245 while consolidating Dollar's resurgence

EUR/USD dropped from 1.1260 to just above 1.1200 overnight. The markets continued to price 31bp of easing at the 31st July meeting though Fed funds futures for 2020 rose about 3bp in implied yield.

EUR/USD News

GBP/USD stabilizes around 1.2400 after the slump to 27-month low

Having plummeted to a 27-month low, GBP/USD recovers to 1.2410 during early Wednesday. British inflation numbers, political plays should be followed by fresh impulse.

GBP/USD News

USD/JPY rejected at 200-hour MA amid losses in Asian equities

USD/JPY is currently trading near 108.15, having faced rejection at the 200-hour moving average of 108.33 earlier today. The JPY is bid, possibly due to losses in equities. Also, Fitch Ratings' affirmation of Japan's rating at 'A' buoys the Yen.

USD/JPY News

UK CPI Preview: Brexit above all else

The monthly change in the consumer price index is expected to be flat in June down from 0.3% in May. The annual rate is predicted to be unchanged at 2 %. The core CPI rate is forecast to be flat in June, after gaining 0.2% in April.

Read more

Gold: Bulls are in the safe-zone, but are barely holding on

The 1400 psychological level is holding up which is just as well for the bulls, as a couple of dollars, a break of the 23.6% Fibo of the latest swing lows and highs could open up an onslaught to the downside.

Gold News

Majors

Cryptocurrencies

Signatures