Market Analysis

The pound is gaining some ground

FOREX

The pound is gaining some ground to the dollar and the euro during early Monday trading. The UK and the EU decided to extend the deadline for the trade deal negotiations, having failed to reach an agreement within the previously self-imposed deadline. The current value of the pound in the spot forex market reflects a general belief on the part of investors that a deal will be reached before the end of the year, seeing the recent posturing from both sides as part of a negotiating tactic.

Ricardo Evangelista – Senior Analyst, ActivTrades


OIL 

Stocks futures have started the week in green amid new hope for a Brexit deal and oil is taking advantage of this situation. Moreover, Asian oil demand has recovered quite quickly, and there are expectations for this trend to continue into the US and Europe over the next few months. In this scenario, Brent is trying to consolidate above $50, confirming the bullish movement of the last few weeks. Technically, a breakout above $51 would open space for further rallies, while the medium-term target is set at $54, a level not seen since last February.

Carlo Alberto De Casa – Chief analyst, ActivTrades

 

EUROPEAN SHARES 
European benchmarks edged higher on Monday, following the trend of the third week of December traditionally proving a bullish one, as investors welcomed macro news. Most markets are now back on track to record fresh highs before year-end after investors welcomed vaccine deployments with this positive news offsetting any negativity about renewed lockdown looming in places like Germany. In addition, the risk-on sentiment is also being carried by positive talks on both the $908 billion US relief package as well as the extension to Brexit discussions in Europe, confirming UK-EU leaders’ will to avoid the “no-deal” situation. However, even if the risk-on trading stance is alive and well today, most investors will be cautiously monitoring tomorrow’s data from China (Industrial Production and Retail Sales) which should provide them with more clues about the true state of the world economy. Furthermore, investors are also bracing for a busy week on the monetary side as central banks from Mexico, Switzerland, Japan, Russia and the Fed in the US are all set to announce updates on their monetary policies.

The FTSE-100 Index in London is one of the only benchmarks flirting with the red territory after stock prices have been impacted by sterling gaining strength. The index remains well set above 6,530pts with the target of 6,775pts still in sight.

Pierre Veyret– Technical analyst, ActivTrades

 

 

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