The Pound lost more than one percent to both the euro and the dollar during early Monday trading. Several countries in the EU and elsewhere imposed border restrictions to the circulation of freight and passengers from the UK, as concerns grow over a new strain of the coronavirus that appears to have originated in Britain and spreads at a faster rate. The scenario is worrying because this latest blow could exacerbate the social and economic impact of the ongoing pandemic in the country. Coupled with Brexit-related tensions – which remain on the wire after another deadline was missed on Sunday night – the new developments are increasing the pressure on the pound as investors’ levels of anxiety over the future of the British economy once again are on the rise.
As markets scramble back to risk-off strategies, the gold price continues to rally. Bullion finished last week close to $1,900, pulled up by new stimulus from central banks and expectations for new measures in the upcoming months. News of the latest UK Covid variant has given further fuel to the precious metal recovery.
From a technical point of view, gold is continuing to regain momentum. After an initial jump to $1,911, the spot price is consolidating on the $1,900 level, in a scenario which remains positive as investors rotate part of their portfolios from stocks to safe haven once again. A first support zone is placed relatively close, at $1,890, while the following key level is $1,875. A surpassing of the early morning peak at $1,911 would offer another positive signal.
Global shares drifted significantly lower at the start of the week as market sentiment is weighed down by renewed virus fears after a new strain of SARS-CoV-2 emerged in the UK. This new variant, far more easily transmittable than previous strains, has had an immediate negative impact on riskier assets around the globe, even offsetting the recent reassuring news on both vaccine deployments and economic stimulus packages. Unsurprisingly, Travel & Leisure as well as Energy shares lead declines in Europe today, as traders move to hedge portfolios by increasing exposures in safe havens such as gold and silver. The trend may continue further today as no major data release or news is expected by investors, and most are likely to wait for evidence that current vaccines will still work against this new variant before going back to stocks again.
Pierre Veyret– Technical analyst, ActivTrades
Disclaimer: opinions are personal to the authors and do not reflect the opinions of LeapRate. This is not a trading advice.
Independent writer and journalist, working in the global online trading sector, Steffy is the Editor of LeapRate. She has previous experience as a copywriter and has been with the company since January 2020. Steffy has a British and American Studies degree from St. Kliment Ochridski University in Sofia.