The pound is retreating from multi-month highs against the dollar during Wednesday trading, following the publication of UK inflation data this morning. Consumer prices rose 1.5% in April, slightly more than the expected 1.4% but not enough to sustain the momentum of the last few trading sessions, during which sterling gained more than 0.6% against the dollar as investors priced-in expectations of an acceleration in economic growth in Great Britain.
Gold just reached a new four-month-high, before slightly curbing its recovery. Buyers are moving to gold, in response to a combination of factors. The two most notable are surely the weakness of the greenback, with the Dollar Index at its lowest for 3 months, and inflation fears. Moreover, risk-on has slowed down, with a moderate shift to risk-off assets such as gold.
Technically, the precious metal remains in a positive trend with the price still challenging the resistance level at $1,870. A clear surpass of this zone could open space for further recoveries.
European benchmarks extended losses on Wednesday, as inflation concerns and virus spikes in Asia offset market optimism about the recovery. Energy and travel shares are among the worst performers as most major indices failed to clear their main resistance level this week ahead of today’s highly anticipated release of the FOMC minutes. This report will be crucial to many investors as they will need to be certain the Fed, and other central banks, will keep sustaining the market in the short to mid-term at least. More precisely, investors remain curious as to how the Fed determines the “transitory” effect of mounting prices, what interpretation it makes out of it and what impact it will have on the near-term outlook.
Meanwhile the consolidation continues on most EU indices while the Stoxx-50 Index is even trading inside a worrying Broadening Formation pattern, which usually indicates a trend reversal.
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.
