The pound is gaining ground on both the dollar and the euro during early Wednesday trading, as investors feel reassured by the successful vaccine roll-out in the UK. Compared to the US and European vaccine deployments, the UK’s effort has proven more successful so far with 11% of the population already having received at least the first inoculation. The immunisation of a significant part of the population is seen as imperative in stopping the deadly and economically damaging cycle of pandemic waves and lockdowns. As the markets appear optimistic about the prospects of the UK’s economic recovery, and subsequently a lower likelihood of the Bank of England introducing negative interest rates, sterling is likely to continue to find support.
All seems to be extremely calm as traders and investors wait to hear from Jerome Powell, Chair of the Federal Reserve, to try and understand if the US central bank is considering any tapering or has any concerns about the possibility of inflation in the next few months. In this scenario, gold is slipping slightly and trading just below $1,850, while investors await new market drivers.
It is a slightly different scenario for oil, which is showing some more strength and a slight price rise. Technically WTI is consolidating and moving in a lateral trading range, after an extended period of recovery. As the long-term trend remains positive, a clear climb above $54 could open space for further rallies but for the time being WTI still appears in a waiting mode.
European shares had a mixed opening on Wednesday with most benchmarks fluctuating, albeit on low volumes. This toneless European trading mood comes after the IMF downgraded the region’s growth outlook amid delays to the vaccine rollout in many areas, which is weighing on today’s market sentiment. In addition, most traders are also in “wait and see” mode, bracing for today’s FOMC press conference and its decision on rates. More dovish measures are widely expected to sustain and protect markets against downside risks. Moreover, tech stock traders are also anticipating increased market volatility later in the afternoon as the giants of Apple, Facebook and Tesla are all set to publish their earnings.
Meanwhile, most European benchmarks remain inside their consolidation pattern, trading above strong short-term support levels, just like a sprinter in the starting-blocks. The DAX-30 Index is still trading above 13,800pts with the zone between 13,940-13,990pts the main upward target on a very short-term basis.
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.