Sterling maintains momentum as May faces pressure to avoid no-deal Brexit
The price of crude oil rose even after data from the EIA showed increased inventories. Over the past week, crude inventories in the United States rose by more than 7 million barrels. This was much higher than the expected drawdown of 42K barrels. Earlier in the day, the American Petroleum Institute (API) released data that showed an increase in inventories by 6.5 million barrels. Also, the price rose after Venezuela’s military came out in support of the embattled president, Nicholas Maduro. This continues to raise tensions in a country whose population appears to be supporting the opposition leader.
Sterling rose in overnight trading as Theresa May continues to face increased pressure to avoid the possibility of a no-deal Brexit. If the UK was to leave the EU without a deal, it would lead to significant challenges for the two sides. Yesterday, the CEO of Airbus released a video where he warned the country’s leaders that the company would leave the country in the event of a no-deal arrangement. This was an important warning coming from one of the biggest employers in the country. If the upward trend continues, it will be the best week for sterling in almost a year.
The euro will be back in focus today after yesterday’s decision by the ECB. The bank left rates unchanged as Draghi talked about the weakening of the economy and the challenges that it faces. Today, investors will receive key survey data. The German ifo Business Climate Index is expected to drop to 100.7 from the previous 101. The current assessment is expected to reduce to 104 from the previous 104.7. Other important numbers will be the total France job seekers and the Spanish PPI.
After yesterday’s sharp declines, the EURUSD pair rose in overnight trading ahead of key survey numbers from Germany. It reached a high of 1.1325, which is moving from the lower Bollinger Band heading to the middle one on the four-hour chart. The signal line of the stochastic oscillator has started moving from the oversold level while the Average Directional Index has moved to the highest level in days. There is a likelihood that the pair will resume the downward trend.
The GBPUSD pair rose sharply in overnight trading, erasing the losses made yesterday. On the hourly chart below, the pair’s price is above the three-week and six-week moving averages. It is also above the two-week adaptive moving average. The Relative Strength Index (RSI) has moved up to almost the overbought level of 70. There is a likelihood that the pair will push on with the momentum. However, traders should be careful because of a possibility of pullbacks.
The USDJPY pair moved up ahead of key durable goods orders data from the United States. The pair reached an intraday high of 109.80, which is along the upper line of the Bollinger Bands. The level is also between the horizontal channel on the hourly chart shown below. The Bulls Power indicator is also rising as the Bears Power fades. There is a likelihood that the pair will continue the upward trend as it aims to reach to the important 110 level.