Sterling jumps after Jeremy Corbyn backs new referendum
Sterling rose in overnight trading after Labor leader Jeremy Corbyn said that the party will back a new referendum to ‘prevent a damaging Tory Brexit’. This raised the chances that there will be a second referendum on the future of the UK’s relationship with the European Union. Senior Labor leaders also announced that they would back a second referendum and aggressively campaign for remaining in the EU. However, there is still a very limited possibility that there will be another vote. In fact, the prospects of another referendum could put pressure on conservative euro-sceptic MPs to support Theresa May’s deal.
The price of crude oil declined after Donald Trump moved to intervene. Yesterday, he sent a tweet, asking OPEC members to ease the supply cuts with the goal of pushing the price lower. This led to a 3% decline in the price of crude. However, there is a likelihood that OPEC and Russia will not heed caution from the US President. In fact, according to a report by Wall Street Journal, OPEC officials have hinted that they will maintain the cuts when they meet in April.
The price of gold remained relatively stable in overnight trading even as a ‘war’ among its producers intensified. Yesterday, Barrick Gold announced an unsolicited offer to buy rival Newmont mining for more than $8 billion. This comes a few weeks after Newmont announced that it will buy rival Goldcorp for more than $10 billion. Barrick’s offer to Newmont offered no premium, which is a sign that Newmont will not agree to it. The industry is facing a challenge of increasing capex and reduced output.
The EUR/USD pair reached a low of 1.1233 on 15th February. The pair then started a slow upward climb and yesterday, it reached a high of 1.1367. On the four-hour chart, the pair’s price is above the 21-day and 42-day EMAs while the signal line of the MACD has flattened above the neutral line. All this is happening in a low-volume environment. There is a likelihood that the price will hold steady ahead of Jerome Powell’s testimony to congress today.
The GBP/USD pair rose after the Labor party announced that it would support a second referendum. The pair reached a high of 1.3147. On the four-hour chart, this level is above all the short and medium-term moving averages while the RSI has moved to above the 70 level. The pair will likely continue moving up, with the next resistance level expected to be at 1.3220. This pair will also likely be affected by the Jerome Powell testimony to congress.
The price of WTI crude oil declined to a low of $55 after Trump’s pressure on OPEC. On the hourly chart, the price is slightly close to the 61.8% Fibonacci Retracement level. As the pair’s price dropped yesterday, the short and medium-term moving averages had a crossover, which is a signal that the declines could continue. However, there is also a possibility that traders will start thinking about Trump’s statement and the fact that OPEC will not increase production. This could see the pair resume the upward trend.