The G20 summit took place in Bali, Indonesia, on November 2022…
How deep may pound dip?
Information is not investment advice
The pound has slumped against other major currencies amid fears over the no-Brexit deal. More details have recently come out over EU-UK tensions. Let’s get into them straight away.
The European Commission claimed on Thursday that it would give a deadline up to the end of September to the United Kingdom to back out the Internal Market Bill (IMB), which violates the initial EU-UK agreement, reached in 2019. If the UK doesn’t withdraw the bill, the EU will take legal action. Further negotiations will continue next week.
The main sticking point is Northern Ireland’s border. The initial agreement was created to avoid the need for a hard border between Northern Ireland and the Republic of Ireland. However, the new legislation, offered by Boris Johnson, may undermine it. The EU threatened the UK with financial, agricultural, and trade sanctions. Nevertheless, the UK Prime Minister stay confident to pass the bill, shrugging off the EU’s disagreement. As a result, the GBP is falling amid Brexit uncertainties.
Elsewhere, the mixed data from the UK came out today. Construction output, industrial, manufacturing production, and GDP exceeded expectations, while goods trade balance and index of services came out worse than the forecasts. Let’s look at the charts.
The yesterday ECB statement underpinned the euro, which led to huge swings on the EUR/GBP chart. The pair has approached the resistance of 0.9300. If it manages to break it, it will surge to the March high of 0.9415. In the opposite scenario, if it falls below the low of March 23 at 0.9150, the way to the key psychological mark of 0.9000 will be clear.
Besides, there are large bearish movements on the GBP/CAD chart. The move below the low of June 19 at 1.6750 will drive the pair down to the March low of 1.6600. Resistance levels are at the key psychological mark of 1.7000 and the strong resistance of 1.7200, which it has failed to cross in the June-July period.
The deafening news shocked the whole world yesterday: the British Queen Elizabeth II died peacefully at the age of 96…
After months of pressure from the White House, Saudi Arabia relented and agreed with other OPEC+ members to increase production.
The first FOMC meeting comes after a buildup of anticipation from traders and investors alike, as the markets await what posture the Fed will take regarding the interest rates; would there be a hike or a cut in interest rates? Recall that the Federal Open Market Committee had previously ended the year 2022 with a 50bps hike, and an indication from Powell, the committee chairman, that the Fed could consider raising interest rates by 75bps in the course of the year 2023.
Western countries are trying to find other options for oil and gas supplies after a 10th package of sanctions, which will put more pressure on Russian oil and decrease global oil supply. Italy, for example, is in talks with Libya.
Last year was tough for the Japanese yen. USDJPY gained more than 30% over 2022, striking above 150 in October. While anticipation of slower Fed rate hikes pulled the pair below the 130 level at the start of 2023, the speculations over the destiny of BOJ’s yield control policy grabbed the attention of the Japanese assets in the middle of January. What lies ahead for traders of the Japanese yen?