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Sterling gains on falling dollar as Britain faces uncertain future

“If you can’t feed a team with two pizzas, it’s too large.” — Jeff Bezos

 

 

 HEADLINES

 

 

  • Sterling gains on falling dollar as Britain faces uncertain future
  • Gold up as dollar weakens, rate-hike fears cap gains
  • Oil rises over 3% on supply threats, still set for weekly drop
  • Wall Street set for weekly gain, boosted by growth stocks
  • U.S. Treasury yields little changed following ECB’s aggressive rate hike
  • GBP/USD risks sinking back to the 1.1410 low – ING
  • GBPUSD Near Term: Upside favored

 

 

Sterling gains on falling dollar as Britain faces uncertain future

 

 

Sterling jumped against the dollar on Friday, as most majors fought back against the greenback's recent strength, capping a volatile week in which the pound hit a 35-year low, Britain saw a new prime minister, and Queen Elizabeth passed away.

The pound rose over 1% in early London trade to as much as $1.1646, its highest level this month, it later pared gains and was last up 0.7% at $1.158.

Sterling's moves against the euro were much more muted. The euro was a whisker lower at 86.81 pence.

 

 

COMMODITIES

 

 

Gold up as dollar weakens, rate-hike fears cap gains

 

 

Gold rose on Friday as the dollar weakened, although prospects of more rate hikes from the U.S. Federal Reserve kept a lid on prices.

Spot gold was up 0.3% at $1,712.69 per ounce by 10:37 a.m. EST (1437 GMT), after rising to its highest since Aug. 30 at $1,729.29 earlier in the session.

U.S. gold futures rose 0.2% to $1,723.60.

The dollar dropped to a more than one-week low against its rivals, making greenback-priced bullion less expensive for overseas buyers.

 

 

ENERGY

 

 

Oil rises over 3% on supply threats, still set for weekly drop

 

 

Oil prices rose over 3% on Friday supported by real and threatened cuts to supply, although futures were set for a second weekly decline as aggressive interest rate hikes and China's COVID-19 curbs weighed on the demand outlook.

Russian President Vladimir Putin has threatened to halt oil and gas exports to Europe if price caps are imposed and a small cut to OPEC+ oil output plans announced this week also supported prices.

Brent crude rose $3.30, or 3.7%, to $92.45 a barrel by 1:21 p.m. EDT (1721 GMT). U.S. West Texas Intermediate (WTI) crude rose $3.11, or 3.7%, to $86.65 a barrel.

 

STOCKS

 

 

Wall Street set for weekly gain, boosted by growth stocks

 

 

Wall Street's main indexes rose on Friday and were set to snap a three-week losing streak, as investors piled into technology and high-growth stocks ahead of key U.S. inflation data next week.

The gains came on the back of a sharp sell-off beginning in mid-August that was triggered by concerns about the impact of tighter monetary policies and signs of an economic slowdown in Europe and China.

Investors are awaiting an August consumer prices report due next Tuesday for any signs that inflation may be easing. It is expected to show that prices rose at an 8.1% pace over the year in August, compared with an 8.5% print for July.

 

 

U.S. Treasury yields little changed following ECB’s aggressive rate hike

 

 

Yields on U.S. Treasury bonds were little changed Friday after moving upward in the previous session following the European Central Bank’s interest rate hike deployed to tackle soaring inflation in the bloc.

The yield on the benchmark 10-year Treasury note was two basis points higher at 3.31% at 12:45 p.m. ET, while the yield on the 30-year Treasury bond was one basis points higher at 3.455%.

The yield on the 2-year note was trading at 3.548%. The short-term note rose to 3.55% last week, reaching its highest level since 2007. Yields move inversely to prices, and a basis point is equal to 0.01%.

 

 

ANALYSIS

 

 

GBP/USD risks sinking back to the 1.1410 low – ING 

 

 

“The UK Gilt market found little to sink its teeth into yesterday regarding the energy support package. Details were scarce in terms of the size of the package and how it is to be funded. At least some of that funding looks set to go through the Gilt market – meaning that the 10-year Gilt-Bund spread can widen out to the 200 bps area. That’s a sterling negative.”

“Cable risks sinking back to the 1.1410 low.”

“Given the challenges in continental Europe, EUR/GBP may trade close, but not break resistance at 0.8720.”

 

 

CHART

 

 

GBPUSD Near Term: Upside favored

 

 

Technical View: Long position above 1.155. Target 1.162. Conversely, break below 1.155, to open 1.153.

Comments: The pair remains supported. Further advance favored.

Source: Trading Central 

 

 

CALENDAR

 

 

*Times in GMT

Source: FX Street Economic Calendar



Foodnotes

https://www.reuters.com/markets/us/sterling-takes-advantage-falling-dollar-britain-faces-uncertain-future-2022-09-09/
https://www.reuters.com/article/global-precious/precious-gold-gains-as-dollar-dip-offsets-some-pressure-from-rate-hike-bets-idUSL1N30G19B
https://www.reuters.com/business/energy/oil-prices-retreat-demand-destruction-fears-benchmarks-off-4-week-2022-09-09/
https://www.reuters.com/markets/europe/tech-stocks-drive-gains-futures-2022-09-09/
https://www.cnbc.com/2022/09/09/us-treasury-yields-after-ecbs-aggressive-rate-hike-.html
https://www.fxstreet.com/news/gbp-usd-risks-sinking-back-to-the-11410-low-ing-202209090646