BY Lukman Otunuga
The global markets are gradually decelerating ahead of the holiday period as lower volumes and a relatively light economic calendar have provided the opportunity for inconsistencies to spring across the board. Erratic movements continue to affect the currency markets as investors unwind their positions and remain on standby in the hope of catching the right side of the many anticipated moves in the New Year.
In addition the high levels of volatility seen in recent days could contribute towards the ongoing concerns around the aggressive oversupply of oil in the global markets, however with Christmas just two days away the markets may be set to rapidly cool down until the New Year.
GBPUSD edges closer to April 2015 low
The GBPUSD received punishment during trading on Tuesday with prices plunging to 1.48 as sentiment towards the Sterling continued to face headwinds from the lingering concerns around the Bank of England’s visible reluctance towards raising UK interest rates. Investor attraction towards the pound has periodically diminished following the recurrent fears around the stagnant rate of inflation growth in the UK, and this has fueled expectations that the BoE will push back raising interest rates deep into 2016. With prices already heavily depressed, if GDP for the United Kingdom in the third quarter fails to meet expectations today, then sellers may send the GBPUSD towards 1.47.
EURUSD enters a wide range
Despite the renewed appetite for the Dollar, the EURUSD has resided in a wide range with support at 1.080 and resistance around 1.1050. The global markets are gradually decelerating ahead of the holiday period, but it seems that the EURUSD may have already entered the festive mood and this may result in prices ranging until the New Year. Regardless of this range, fundamentally the EURUSD remains bearish and the potential expansion in divergence in both monetary policy and economic sentiment between the United States and Europe should encourage bears to send prices back towards 1.064 in the near future.
GOLD finds resistance around $1080
The abrupt appreciation in Gold was halted around $1080 during trading on Tuesday before prices rapidly declined a near $10 concluding the day negative. This precious metal remains fundamentally bearish and the relief rally on Monday may have provided the opportunity for bears to drag prices lower. With US interest rates having increased for the first time in almost a decade, the bears have been provided a foundation to install another round of selling momentum into this yellow metal before the end of the year. An appreciating Dollar may act as a trigger which should encourage sellers to send prices down towards $1046 and potentially lower.
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