The pound continues to lose ground on the other major currencies during early Tuesday trading, following yesterday’s sharp decline which was the biggest versus the euro and the dollar since April. Investors are concerned by the escalation in the number of new cases in the UK attributed to the Delta variant, which is happening despite large segments of the population being fully vaccinated. This dynamic coincided with yesterday’s lifting of almost all restrictions in the UK, which appears to have compounded fears that if allowed to run free through children and the sizeable numbers of adults refusing to be vaccinated, the virus will remain a threat to the nation’s health system and may force a new shutdown of the economy somewhere down the line. It is clear that the markets aren’t responding positively to the, perhaps untimely, lifting of almost all COVID-related restrictions, seeing in such strategy the danger of perpetuating the cycle of opening up and shutting down as new variants start to undermine hopes of a virus free future promised by the vaccines.
Gold was steady despite yesterday’s equity market sell off with the price continuing its slow dance above $1,800. However, the technical configuration isn’t reassuring to investors as the market recently broke-out of its short-term bullish trendline following a 50% bullish retracement of the last bearish impulsion from the $1,900 zone. Despite the market’s recent strong bullish reaction when the price reached $1,794, the short-term outlook will remain bearish as long as the price doesn’t clear $1,820, with $1,802, $1,794 and $1,782 the next support zones.
European share markets opened significantly higher on Tuesday, paring some of yesterday’s losses amid an uncertain trading mood. Even if market volatility is picking up in the second half of July, investors are still struggling with both lower summer liquidity and an ambiguous macro context. While short-term bearish drivers like mounting virus fears and inflation worries are still shaking this month’s market sentiment, today’s strong reactions over key support levels suggest the bullish trading stance remains alive. Indeed, most traders expect the recovery to continue until the end of 2021, albeit with occasional volatility spikes that could be triggered by an acceleration in the spread of the virus or disappointing macro results or earnings. Talking about earnings, investors will pay attention to today’s results from Alstom, Ubisoft and Netflix.
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.
Experienced 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.