GBP: Volatility to rise in coming weeks on UK political risk - ANZ

Dhwani Mehta FXStreet

Analysts at ANZ over their outlook on the GBP/USD pair, especially after the BOE’s dovish rate hike and amid looming Brexit uncertainty.

Key Quotes:

“With a number of key events likely to drive a rise in volatility over the coming weeks

Scandals are threatening PM May's thin majority and are likely to leave the Tory party (and May's leadership) weakened.

UK-EU negotiations will start tonight ... scheduled to occur every three weeks ... there are just three rounds of negotiations before December's EU summit, where EU leaders will have to decide (again) if sufficient progress has been made.

The UK Government may publish 58 'secret studies' on Brexit.

Finally, October's CPI will be released next Tuesday, and that may also drive some volatility in the GBP - considering the highly contingent nature of the BoE's current tightening cycle.

We think these factors are under-priced in option volatility and recommend buying a 1 month GBP/USD ATM Straddle at a cost of 1.65%.”

Author

Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

EUR/USD tumbles below 1.1800 as Middle East turmoil drives US Dollar demand

The EUR/USD pair falls to near 1.1770 during the early Asian session on Monday, pressured by a renewed US Dollar demand. The Greenback gathers strength against the Euro as the conflict across the Middle East is heightening traders' anxiety, boosting the safe-haven currencies.

GBP/USD trims losses, retests 1.3460

After briefly challenging its key 200-day SMA near 1.3440, GBP/USD now manages to regain some balance and revisit the 1.3460 zone on Friday. Cable’s pullback comes as the selling pressure on the Greenback gathers traction, reigniting some recovery in the risk-linked space.

Gold jumps over 2% toward $5,400 after US, Israel attack Iran

Gold is on fire at the start of the week, a widely expected move, as investors seek harbor in the traditional store of value, following the continued US and Israel attacks on Iran. The bright metal opened with a bullish gap of about $17 and rallied toward the $5,400 level as Asian traders hit their desks and reacted negatively to the weekend news of the Middle East conflict, rushing for cover in Gold.

Iran escalation: Quick thoughts on markets

Markets are likely to open the week with risk-off, with declines led by airlines, cyclicals and trade-exposed names, while energy, defense and “strategic” sectors may be relatively steadier.

Oil at a critical breakpoint: Will geopolitics trigger the next major move?

The week ahead blends two powerful forces: moderating economic momentum and increasing geopolitical tension. While US and Eurozone data suggest steady but unspectacular growth, rising friction between the US and Iran is injecting a fresh risk premium into energy markets.

Starknet unveils strkBTC, shielded Bitcoin transactions on Ethereum Layer 2

Starknet, the Ethereum Layer 2 network developed by StarkWare, today announced strkBTC, a wrapped Bitcoin asset that introduces optional shielding while preserving full DeFi composability.