2020-10-06 • Updated
Goldman Sachs advised investors to go long on the pound vs the euro. How far may EUR/GBP drop? Let’s find out!
The EU and the UK are planning to reach the Brexit deal in the coming weeks. Wall Street analysts anticipate that both sides will make an agreement as soon as early November, that’s why the British pound is likely to gain since it is really sensitive to Brexit developments. The President of the EU Commission Ursula von der Leyen and UK Prime Minister Boris Johnson have agreed on this weekend to continue talks over main sticking points like fisheries and aid issues. Once the market knows the outcome, the further pound’s further traction will be defined. Overall expectations are more positive, which is beneficial for the GBP. Among pound bulls are Goldman Sachs, Wall Street, and JP Morgan, but, for example, Nomura doesn’t rush nor to buy the pound, neither to sell it, waiting for more clarity in EU-UK negotiations.
EUR/GBP has entered the descending channel, proving the possibility of further pound’s strength. The pair has almost reached the upper trendline, that’s why there’s no more room for the pair to keep rallying up. Therefore, if it reverses from the high of July 27 at 0.9120 and starts falling, it may meet the support at the 200-period moving average of 0.9065. The move below it will drive the pair to Friday’s low of 0.9045. Resistance levels are 0.9120 and 0.9150. Keep an eye on further Brexit news, if you trade the pound!
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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