Market Analysis

The pound continues to show signs of strength

FOREX

The pound continues to show signs of strength, gaining ground to the euro during early Thursday trading. Sterling is being supported by yesterday’s unveiling of the budget for the next fiscal year by the Chancellor of the Exchequer, which guarantees the continuation of fiscal stimulus throughout the summer. Alongside the success of the vaccine rollout, the prospect of continued fiscal support throughout the beginning of the recovery is likely to help the UK’s economy see a return to normality ahead of its peers on the continent. This sense that Britain will be quicker on its feet than previously thought is behind the recent increase in demand for the pound and could create scope for further near term gains for the currency.

Ricardo Evangelista – Senior Analyst, ActivTrades

Source: ActivTrader

 

GOLD
Gold is still suffering against the strength of the greenback with the price unable to rebound. Bullion has lost more than $350 from the record reached last summer as investors are betting on a quick economic recovery. Negative sentiment is still dominating in the short-term, while the medium-term trend has also been compromised by the recent decline of the spot price, which has fallen below the low reached in late November. The main question now relates to where the first valid support for gold will be to arrest this decline. With this in mind, the spot price is now approaching the $1,700 threshold, which represents the first key level to monitor, while the next support zone is placed at $1,670-$1,675.

Carlo Alberto De Casa – Chief analyst, ActivTrades

 

EUROPEAN SHARES 
European benchmarks fluctuated on Thursday alongside US futures, while Asian shares closed in red territory at the end of a trading session mostly controlled by bears. Yesterday’s resurgence of market optimism was short-lived as concerns rising bond yields will compromise an extended rally on stocks linger in investors’ minds. While some market operators are already anticipating an “healthy” bearish correction on stocks, some of them may qualify this uncertainty as short-term market noise and an interesting buying opportunity. Tech is one of the worst performing sectors while financial, energy and real estate shares continue to outperform their benchmarks, illustrating that stock traders have switched their exposure from an overbought industry to more defensive sectors.

Meanwhile investors brace for a busy day today with a new batch of major macro data, the OPEC+ meeting as well as the speech from the Fed Chairman Jerome Powell, ahead of today’s NFP release.

Pierre Veyret– Technical analyst, ActivTrades

 

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