Brexit commotions heighten Sterling sensitivity

The Sterling was catapulted onto an unpredictable path during trading this month as the intensifying Brexit debate heightened currency sensitivity which consequently left prices vulnerable to sharp swings. Explosive bursts of volatility have influenced the erratic movements in the Pound and these can be attributed to the mounting Brexit uncertainty that continues to leave investors anxious.

Although the “Bremain” camp has displayed dominance this month with current polls suggesting a lead, sentiment towards the Sterling remains bearish and this should offer encouragement for bears to pounce.

While the growing fears over the immeasurable impacts of a Brexit to the UK economy continue to haunt investor attraction towards the Sterling, the rapidly diminishing expectations that the Bank of England may raise UK rates have pressured prices considerably.

Investors may direct their attention towards the inflation report hearing on Tuesday where Bank of England governor Mark Carney will testify to the Treasury Select Committee. Carney may receive a heavy grilling from the committee, especially after his comments suggesting that the UK economy could enter a recession if voters decide to leave the EU. Since the Brexit debate started, there have been a handful of financial heavyweights that have voiced their concerns over the impact of a Brexit to the UK, Europe, and Global economy, with the Bank of England joining that league. While it seems likely that the concerns voiced by these leading financial institutions could have impacted the polls, it remains certain that uncertainty blankets the markets as the vote day looms.

Although bulls may be commended on their ability to keeping the GBPUSD above 1.4500, the sense of exhaustion displayed could encourage bears to send the pair lower. From a technical standpoint, prices are trading above the daily 20 SMA but the MACD is flat. A solid breakdown and daily close below 1.4500 could open a path towards 1.4400.

Eurozone growth stalls

The bearish sentiment towards the Eurozone economy descended to deeper depths during trading on Monday following the dismal PMI data that showed business growth plunging to a painful 16 month low. This is combined with the concerns over both faltering inflation levels and the European Central Bank’s inability to revive economic growth despite the aggressive measures taken. With domestic data repeatedly disappointing and external woes exposing the Eurozone to downside risks, the ECB may be under immense pressure to implement another batch of aggressive measures.

It seems that the mixture of weak data from Europe and Dollar resurgence may have provided an opportunity for the EURUSD to sink lower. From a technical standpoint, prices are trading below the daily 20 SMA while the MACD has crossed to the downside. Previous support at 1.1250 could transform into a dynamic resistance which could open a path towards 1.1150.

WTI edges towards $47

WTI crude entered a period of consolidation below $50 during trading this week following the clashing reports concerning production levels that have left investors anxious. Although there have been some short-term distributions from oil export nations, the oversupply concerns continue to linger and this has consequently haunted investor attraction towards oil. Prices may likely consolidate ahead of the OPEC meeting which most already expect will end without a solution to curb the oversupply in the markets. Sentiment remains bearish towards WTI and this unstable appreciation could tumble abruptly with the correct catalyst. From a technical standpoint, prices are trading above the daily 20 SMA while the MACD has crossed to the upside. A breakdown below $47.50 could open a path towards $46.50.