Cable rises after Johnson becomes next UK Prime Minister
Gold rose today after South Korea fired warning shots at Russian aircraft that had violated their airspace. The South Korean air force fired 360 shots after Russian strategic bombers flew into its territory above the Sea of Japan. In a statement, the country’s director of national security said that the country would take far stronger action if the same mistake was repeated. This was the first time that such an occurrence happened in South Korea. It raised serious concerns about Russian activities in the region. In response, Russia said that its bombers did not violate the South Korean airspace and accused the Koreans of creating a threat to the Russian planes. These activities were interpreted to measure the level of preparedness of key US allies in the region.
The cable rose today after Boris Johnson won the vote to become the next conservative leader and Prime Minister. This was widely expected. In a statement, Boris said that he would work to reconcile two competing needs – to work with the European Union but also to pursue democratic self-government. He also pledged to ‘get Brexit done’. Boris is a well-known Eurosceptic, who has said that while he prefers to do a deal with the EU, he is not afraid of leaving without a deal. In a statement after Johnson won, Michel Barnier, the chief EU negotiator said that he was ready to rework the agreed partnership.
US futures rose today boosted by better-than-expected second quarter’s results. Coca-Cola stock rose by 2.2% after the company beat analysts’ expectations. The same was true for United Technologies, Biogen, and Hasbro, which rose by 2.6%, 2.2%, and 4.1% respectively. Intel rose by 1.3% after Apple announced that it would acquire the company’s modem chips. Harley-Davidson’s stock declined after the company lowered its full-year motorcycle shipment forecasts citing delays in regulatory approvals and tariffs. In Europe, banks like UBS and Santander declined after weak performance. UBS blamed the weak performance on the decline of the wealth management unit while Santander blamed the weak earnings on restructuring charges.
The EUR/USD pair continued the declines started on Friday, when the pair made a double top pattern. Today, the pair reached a low of 1.1168, which was the lowest level since June 4. On the four-hour chart below, the pair is trading along the lower line of the Bollinger Bands. The price is also below the 25-day and 50-day moving averages while the RSI has dropped to the oversold level of 30. The price is also along the 23.6% Fibonacci Retracement level. The pair will likely continue moving lower, to test the 1.1100 level.
The XAU/USD pair rose to a high of 1426, which was higher than the intraday low of 1415. On the hourly chart below, this price is slightly lower than the 61.8% Fibonacci Retracement level and slightly above the middle line of the Bollinger Bands. The price is slightly below the 61.8% Fibonacci Retracement level, while the RSI has climbed close to the overbought level. The pair will likely continue moving higher to a high of 1430.
The GBP/USD pair rose and then pared some of those gains as Boris Johnson prepared to be the next UK prime minister. The pair is trading at 1.2447, which is slightly lower than the day’s high of 1.2480. On the chart below, the price is below the 25-day and 50-day moving averages. The RSI has moved slightly higher and is currently at 40. The pair could remain at these levels as investors digest the reality of Boris Johnson as Prime Minister.