Market Analysis

The Pound is losing ground to the euro and the dollar

FOREX

The Pound is losing ground to the euro and the dollar during early Friday trading, following remarks made by the British Prime Minister, pointing to the strong possibility of the UK and the EU failing to strike a post-Brexit trade deal. The EU had also signalled increased readiness for such a scenario by publishing on Thursday a list of emergency measures to be adopted should there be no agreement. Despite the recent sterling losses the spot forex market is still pricing-in an outcome entailing some form of trade deal between the parties, perhaps interpreting the latest posturing from the two sides as negotiating tactics. However, every day that passes without positive developments means the risk level for sterling traders continues to rise with a correspondent growth in downside for the currency.

Ricardo Evangelista – Senior Analyst, ActivTrades

 


GOLD

Gold price has failed to continue its recovery, falling again below the support zone of $1,850. This comes despite a moderate return to risk-off in stock markets, and while the dollar remains weak. This could be seen as a signal of some weakness of the underlying strength. Gold had been expected to hold yesterday’s $1,850 support level, and the failure to do so indicates investors are cautious on further betting on the precious metal in the current scenario.

Technically the first support zone is now placed at $1,830, while a new recovery above $1,850 would be seen as positive. For a clearer bullish signal we would now need the price to surpass the top reached earlier this week at $1,875.

Carlo Alberto De Casa – Chief analyst, ActivTrades

 

 

EUROPEAN SHARES 
European stocks drifted significantly lower on Friday, after the risk-on sentiment got shattered by rising economic uncertainty for the last session of the week. Yesterday’s bullish stance vanished on Friday after investors’ risk appetite was weighed down by macro data (disappointing job report) in addition to lingering uncertainties over the next covid relief packages from the US and the EU. Even if vaccine developments continue on track, investors lack clarity on the very short-term, after recent data displayed a mixed picture of the recovery while virus cases and deaths continue to grow. There is a high chance markets will remain volatile but not very directional until investors get more clues on where the economy is going as well as on the next moves from governments and central bankers. However, a breakthrough would allow most markets to register higher tops before year-end.

Pierre Veyret– Technical analyst, ActivTrades

 

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