GBP surges, Dollar drops, Gold sustains bull

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GBP surges, Dollar drops, Gold sustains bull

GBP, US Dollar, Euro, Gold and Crude oil trading points

  • A pre-meditated bullish bias on US-China negotiations outlook appears to be keeping the investors riant, yet fears of US tariff on European autos kept the buyers on their toes
  • Dollar was the worst performing major on Wednesday, the 20thof February so far, while further bearish bias could unveil itself ahead of FOMC minutes today, scheduled on GMT 23.00.
  • Brexit related headlines seem to be supporting the GBP, as it sustains bullish momentum alongside gold.

Euro & GBP upbeat on affirmative Brexit headlines, gold and oil rise on trade talk hope, dollar dwindles ahead of downbeat FOMC Minutes

Yesterday (February, 19th), the US markets had been back from an extended holiday, and experienced an abrupt shift in the market momentum, as it lost ground today (February 20th), and had been the worst performing major against a basket of currencies like GBP,EUR

GBP/USD daily price chart

GBP/USD daily price chart

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Despite worries over US tariff on European autos, the Euro kept sailing with a bullish bias and while preparing this report, euro was being traded at 1.1362, while the traders are eyeing its initial resistance level at 1.1425. Meanwhile, GBP kept surging on positive Brexit headlines, as EU commission’s Jean-Claude Junker had told yesterday that the Brexit deadline could have been extended, as cited in a Bloomberg report.

EUR/USD daily price chart

EUR/USD daily price chart

Over the other side of the Atlantic, US-China trade talk had been continuing and kept fuelling the optimism level surrounding around a decipherable outcome of the trade talk. Apart from that, optimism over trade talk had also increased the previously moderated risk appetite of the investors, as traders are betting on riskier assets.

However, ahead of an expected to be downbeat FOMC minutes today, the Gold keeps surging and USD drools. Crude oil keeps gaining momentum on further Saudi output cut, as an offshore oil mine at Safaniya, Saudi Arabia, had halted production due to an outage earlier and the Safaniya offshore oil field, alone, used to produce 1,00,000 barrels of oil per day. During the preparation of the report, the US crude was trading at 57.50, while traders are eyeing a re-test of $60 level per barrel over optimism of further production cut from outside OPEC, oil producing nations which is expected to be taken place earlier next month.

Bottom Line

So far, market is closely observing the geo-political issues including Brexit, an election over Spain, Sino-US trade talk and additional tariff on European autos on US imports.

As far as Brexit is concerned, following the reveal of possibility of an extended Brexit deadline, the GBP would likely to extend gain, while the euro would likely to re-test its initial resistance level, resurfacing over 1.14 level following an expected dovish FOMC minutes.

Concomitantly, the gold and crude oil would likely to sustain gains amid an altered geo-political scenario, increasing the risk appetite of the traders, and a higher volatility level is expected in the US markets following the FOMC minutes.

Read more on Gold outlook here

[Disclaimer: The content of this article is personal opinion and should not be considered as investment advice or suggestion towards any trading activity.]

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