The pound is recording gains versus the dollar
The pound is recording gains versus the dollar and the euro during early Wednesday trading. Carrying the momentum initiated yesterday, sterling is defying the low expectations set by a shaky start to the year by gaining almost 1% to the single currency and 1.5% to the dollar over the last 24 hours. An ambitious, and so far reasonably well deployed, vaccination plan is placing the UK in a privileged position in relation to the EU and the United States in bringing the coronavirus under control and in pole position for the expected post-pandemic economic recovery. In addition to vaccine hopes, the pound is also being supported by the words of Andrew Bailey, as the Bank of England governor talked down the case for further interest rate cuts during a speech made on Tuesday, also highlighting the dangers of adopting negative rates.
Ricardo Evangelista – Senior Analyst, ActivTrades
European shares fluctuated on Wednesday, following a mixed trading session in Asia where Chinese stocks slid lower while Tokyo outperformed. Even if the Fed tried to reassure investors yesterday by providing them with a harmonized dovish reaction from all governors, the lack of market directionality today reflects the uncertain market sentiment. Market volatility may be on the rise towards energy shares and the retail sector today as investors await the US CPI report and the US Crude Oil Inventories, which are due later in the afternoon.
The DAX-30 Index has recently broken-out its very short-term bullish trendline, opening the door to a consolidation or even a deeper market correction towards 13,600pts.
Pierre Veyret– Technical analyst, ActivTrades
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