2020-06-29 • Updated
Does the pair still have the potential to the upside?
The British pound has been the worst performing major currency amid the coronavirus pandemic. The main reason is that investors have started to increasingly correlate it with risk. That’s why, fears of the second virus wave pushed it down. The global amount of coronavirus cases has exceeded 10 million this weekend. Investors are concerning about the potential virus resurgence in Leicester.
Moreover, Brexit negotiations weigh additional pressure on the pound. The overall situation over the Brexit deal is uncertain as it hasn’t been any breakthrough yet in the EU-UK talks. The British economic recovery is slower in comparison with European countries. Also, the Bank of England cut the quantitative program too early, that had a negative impact on the GBP. However, the central bank pledged to increase it, if needed. So, it’s just a matter of time.
Unlike the GBP, the euro is more attractive for investors. It has even outperformed the US dollar. The Eurozone has the best coronavirus outlook. Since the whole market sentiment is driven by the COVID-19 developments, EUR has gained. Moreover, investors are optimistic about the European Central Bank recovery fund. If the German chancellor Angela Merkel and the French president Emmanuel Macron make a progress in this deal, EUR may rise. We’ll know on July 17-18 at the EU summit.
The EUR/USD is approaching the 61.8% Fibonacci retracement level at 0.9200. If it breaks it through, it will surge further to the next resistance at 0.9340. Support levels are at 50% and 38.2% Fibo levels – at 0.9100 and 0.9000, relatively. Some analysts consider that it’s overbought, but others still have bullish prospects.
China has issued new oil product export quotas to allow oil companies to send surplus barrels overseas, particularly Sinopec, which has the highest volume among quota holders. While the exact quota volume remains undisclosed, oil companies are forecasted to export approximately 3.5 million metric tons of clean oil products in September, a 10% increase from August.
Thanks to the incredible advancements in horizontal drilling and fracking technology, the United States has experienced a mind-blowing shale revolution. They've become the heavyweight champion of crude oil production, leaving Saudi Arabia and Russia in the dust. They even turned the tables and became net exporters of refined petroleum products in 2011.
Oil prices rebounded slightly on Friday but are still expected to show losses for the week due to concerns about slowing growth in the US and China. US crude futures rose 2.7% to $70.41 per barrel, while the Brent contract increased by 2.5% to $74.33 per barrel.
The past several weeks have been a real triumph for the bulls in the oil market. The Brent spot price grew by 8.5% during the last month.
Gold prices are rising for three consecutive days ahead of the Federal Reserve (Fed) interest rate decision, which is expected to remain unchanged due to declining inflation and a positive economic outlook. Investors are keen on the Fed's interest rate guidance, fearing a hawkish stance that could trigger market risk aversion.
Amid concerns of a Chinese economic slowdown, reports of declining investment often overlook China's efficient investment strategy in emerging sectors for long-term growth. China has taken measures to stabilize foreign and private sector investments, like reducing the reserve requirement ratio to boost investor confidence.
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