FTSE Not Out of the Woods Yet

The bigger the drop, the bigger the rebound. That is what has happened with the FTSE 100 index in the aftermath of the UK's vote to leave the EU. In fact, the rebound has been so profound that the index has nearly made good all the losses suffered since the Brexit vote. Clearly, some investors who were lucky enough to come through the Brexit-stimulated drop relatively unscathed may now use this opportunity to either cut or reduce their stocks holdings or at least hedge their exposure by shorting the FTSE. This could especially be the case since we are approaching month-end; it would not look good on money managers who hold stocks in sectors that dropped massively post the Brexit vote. Added to this, bearish speculators who missed the original plunge may be tempted to step in and ride the next potential drop. So the FTSE could easily turn back lower.

Daily Technical Analysis

EURUSD

The EURUSD had a bearish momentum yesterday bottomed at 1.1239. The shooting star formation I showed you yesterday gave us a valid bearish signal. The bias is bearish in nearest term testing 1.1150 and the lower line of the bullish channel which remains a good place to buy with a tight stop loss. Immediate resistance is seen around 1.1285. A clear break back above that area could lead price to neutral zone in nearest term testing 1.1350 region. On the downside, a clear break and daily close below the bullish channel would activate my bearish mode with nearest target seen around 1.1000.

Crude Back at $50 as Traders Anticipate Sharp Draw in US Stocks

Oil prices are little-changed at the time of this writing after they snapped back into the positive territory and above $50 a barrel late in the day yesterday. Both oil contracts were lower in the first half of yesterday's session. This was possibly due to a rebounding US dollar and profit-taking ahead of US oil inventories data, especially since prices had risen rather sharply in the prior couple of days. Crude oil, which has been unable to decouple itself from risk assets, was also tracking the movements in equities and GBP ahead of the all-important Brexit vote on Thursday. The GBP/USD and stocks gave up their earlier advance yesterday after new polls showed support for Brexit had increased a tad. So oil was coming under pressure from this source, too.

Sterling’s brief respite against the markets ends

Another tough day for sterling on Wednesday saw it fall to a two-and-a-half week low against a strong US dollar, whilst slipping close to Monday’s lows against the euro. With markets drawing breath on Tuesday, sterling was able to make marginal gains against the euro and US dollar but these were then erased throughout Wednesday thanks to a resumption in European and British stock declines saw sterling struggle across the board. Comments by Federal Reserve member Dudley which suggested a September interest rate-hike in the US was unlikely, but this was largely ignored by the markets as sterling continued to weaken.

Today sees the release of preliminary economic growth figures from the US for the previous quarter. This could have a significant effect on the markets, with growth expected to pick up to 0.7% compared to the previous year.

If you are looking to buy or sell sterling, we suggest contacting your trader now for live rates, news and currency-purchasing strategies.

Source:smartcurrencyexchange

POUND NOT ABLE TO PRESERVE ONE PARTICULAR-WAY MOVEMENT TO UPSIDE

The Great Britain closed lower today despite another positive economic report that added to evidences of recovery in the United Kingdom. Forex traders were concerned that the currency was going too long in one direction.

Public sector net borrowing excluding temporary effects of financial interventions was at £13.2 billion in August. It was £1.3 billion lower than the budget deficit of £14.4 billion a year ago. Analysts have predicted slightly higher reading.

POUND DOWN ON WEAKER THAN EU OUTLOOK

The pound started the week down versus the euro and the U.S. dollar as sentiment towards other wealthy nations in the world remain more positive than the U.K.’s economic perspectives, forcing investors to abandon pound priced assets to inject capital in more attractive currencies backed by fast recovering nations.