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.
GBP got support after BoE's report
2020-09-22 • Updated
Bank of England Governor Andrew Bailey delivered a speech today. Let’s discuss what it means for a trader.
The Bank of England cautioned that rising new virus cases in the UK may jeopardize the economic outlook, therefore, the bank needs to take hard actions to support the British economic activity further. Indeed, it seems that the Covid-19 has engulfed the United Kingdom: new infections are climbing by at nearly 6 000 a day. Therefore, the government may impose the second national lockdown.
Besides, coronavirus is not the only problem, which the UK faces. Brexit is also a significant issue, which has to be solved. Looking back at the latest Brexit talks, the EU and the UK are still far away from reaching an agreement. However, recent upbeat comments of European Commission President Ursula von der Leyen have curbed down fears over no-deal Brexit.
The central bank pledged to take hard actions to support the economy further. Many investors thought that last week the central bank hinted at the negative interest rates during its monetary policy statement. However, today the BoE’s governor said that investors took it wrong. According to him, negative rates are just part of the central banks’ toolbox, and the outcomes of implying them in different countries have been mixed. Since there are no negative rates on the horizon, which were initially expected by investors, the GBP has got support. The market was too rash to sell the GBP at the beginning and it’s trying to correct this mistake by buying it.
In addition, on Wednesday Manufacturing and Services PMI reports will be out at 11:30 MT time! If the numbers come out better than the forecasts, the GBP will rise. In the opposite scenario, if they come out worse – the GBP will fall.
Immediately after the report the British pound has dropped briefly, but then started climbing up. If it jumps above the high of September 14 of 1.2875, the way to yesterday’s high of 1.2960 will be open. On the flip side, the move below the support of 1.2780 will drive the GBP/USD lower to the 100- and 200-day moving averages at 1.2730.
China's economy is rocketing. On the other hand OPEC+ countries take the decision to cut the production. What will be the impact on the oil price?
The past two years have seen the biggest swings in oil prices in 14 years, which have baffled markets, investors, and traders due to geopolitical tensions and the shift towards clean energy.
Let's dive into the latest developments shaping the global economic landscape. Good news first: the threat of an unprecedented US debt crisis has receded, as US lawmakers passed a bill to raise the debt ceiling and avoid a catastrophic default. Phew! But don't pop the champagne just yet, because storm clouds are still looming. High inflation, rising interest rates, and sluggish growth are challenges that have yet to disappear.
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.
Let's dive into the world of gold. Currently, the price of gold, represented by XAUUSD, is stuck in indecision, hovering around the $1,975 mark. The market is anxiously awaiting two important factors: the release of the Federal Reserve's meeting minutes and the extension of the US debt ceiling.