The pound is on the front foot in relation to the other major currencies at the start of the trading week. Sterling gains versus the euro and the dollar are particularly significant as it shows the markets are dismissing the British government’s rhetoric that negotiations with the EU are over and the future trade relationship will be based on WTO terms as a bluff. If investors’ stance in relation to sterling is anything to go by, then negotiations are far from over and the chances of a deal between the two parts being reached are reasonably high.
The countdown clock is running down quickly with both Brexit and the US election getting ever closer to an end (at least for US elections). Despite this, we are not yet seeing risk aversion on the markets with stocks continuing the rebound started on Friday. Bullion has also started the new week in green with the spot price again approaching $1,910. A clear climb above $1,925-$1,930 would open space for further rallies, while the scenario remains mostly unchanged so far with the long-term bullish trend untouched, while in the short term we are living a lateral phase in the big trading range $1,850 and $2,070. As mentioned, we have some intermediate levels, at $1,930 and $1,970 (resistances) and $1,885 and $1,872 (supports).
European stocks edged higher on Monday, alongside Asian shares and US Futures, despite mixed macro data from China. Positive talks between US officials about a “possible” stimulus deal prior to the elections has been sustaining market sentiment this morning but it wasn’t just that. Acceleration in the number of Covid-19 infections has made investors expect further government support on a short-term basis and it seems they are already pricing that in, with the nature of the support depending on who wins the upcoming presidential election. European investors remain focused on Brexit with surprisingly positive developments to start the week with the UK Parliament potentially forcing Prime Minister Boris Johnson to rewrite or reconsider its Internal Market Bill. This may revive stalling talks with the EU bloc after investors were disappointed to see Boris Johnson ready to walk away from the table without any deal. However, despite this early positive trading mood, investors will remain cautious and monitor corporate news as the earning season continues. All European benchmarks are trading higher, led by insurers and the banking sector, with the French CAC-40 the best performer as the market now heads up towards 5,000pts.
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.