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Pound gains on Brexit Voting

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USD

On Tuesday, the Greenback settled on to most of its gains vs. a basket of major currencies, following a sharp rebound on improving trader risk sentiment as concerns over North Korea and Hurricane Irma eased.

In response to North Korea's sixth nuclear missile test, the U.N. Security Council voted unanimously yesterday to tighten sanctions against Pyongyang. No reports were out of the US economy but a buoyant stock market performance has boosted the dollar. JOLTS job openings and NFIB Small Business Index are due from the US today.

  • The U.S. dollar index, which tracks the greenback against a basket of six major peers, fell as much as 0.07%, to settle at 91.812 pips.

GBP

The Sterling pound managed to settle higher vs. the single currency and the U.S. dollar on positive Brexit law voting last night. On the data front, consumer price inflation in the U.K. rose more than forecast in August. Strong data such as this could increase anticipation that the BoE may adopt a more hawkish tone on interest rates at its upcoming policy meeting on Thursday. UK consumer prices rose as much as 2.9% up from 2.6% in July. GBP/USD rose as much as 0.81% to settle at $1.3270.

EUR

The common currency recoiled against its contemporaries as some of its peers as traders appear cautious to go long on the currency without any additional catalysts. In terms of data, the Italian industrial production report came in better than expected with a 0.1% increase as opposed to a predicted 0.5% decline. The Italian quarterly unemployment rate and French final non-farm payrolls forQ2 are due next.

JPY

The Japanese currency was one of the biggest underdogs this week as improving risk appetite led traders to drop the lower yielding currency. Data though came in positive with preliminary machine tool orders rising 36.3% year on year, the core machinery orders increasing to 8.0% and the tertiary industry activity up 0.1%. As no reports are due from Japan today, risk sentiment will possibly be the main driver of the currency.

Gold

Gold declined from its highest level in a year on Monday, as concerns over the potential damage of Hurricane Irma and tensions on the Korean Peninsula receded. The precious metal was also being weighed down by a sharp US Dollar recovery, supported by a strong uptick in the US Treasury bond yields, which tends to dent demand for dollar-denominated commodities. 

Despite declines, the yellow metal has been well-backed in recent weeks amid worries over geopolitical uncertainty on the Korean peninsula and amid lower anticipation of U.S. monetary policy tightening. Gold Futures - Dec 17 fell as much as 0.31%, to settle at $ 1,332.75.

Oil

Earlier today, oil prices fell as markets are awaiting the Organization of Petroleum Exporting Countries' monthly report to evaluate the global supply and demand levels. On the other hand, prices have been affected negatively as investors weighed up the negative effect on demand of Hurricane Irma versus refinery restarts in the wake of Hurricane Harvey that would lead to further crude oil processing. In response to the impact of Harvey that struck the Texas Gulf Coast on August 25, the EIA said U.S. oil refinery utilization rates declined 16.9% points to 79.7% last week, the lowest rate in about 7 years. Crude Oil WTI Futures - Oct 17 fell as much as 0.19%, to settle at $47.98, while Brent Oil fell as much as 0.28%, to settle at $ 53.69.

The most important economic events:

  • GBP Consumer Price Index (YoY) (AUG): (GMT 08:30) – Important – Forecast (2.8%) – Previous (2.6%).
  • GBP Core Consumer Price Index (YoY) (AUG): (GMT 08:30) – Important – Forecast (2.5%) – Previous (2.4%).
  • GBP House Price Index (YoY) (JUL): (GMT 08:30) – Important – Forecast  (4.8%) – Previous (4.9%).

We wish you all the best in your trading activities. For any further assistance, please do not hesitate to contact us at clientservices@ICMCapital.co.uk

Disclaimer
The prices and news mentioned in this outlook are absolutely no guarantee of future market performance and do not represent the view of ICM Capital Limited. Financial markets can move in either direction causing profits to be made or complete losses to be incurred by the trader. Each trader must decide for themselves what their risk appetite is and ensure that correct risk management procedures are in place before placing any trades.

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