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Sterling holds ground despite Brexit risks and economic woes

“If you can dream it, you can do it.” — Walt Disney 

 

 

HEADLINES

 

 

  • Sterling holds ground despite Brexit risks and economic woes
  • Gold steadies as traders await central bank cues
  • Oil rises 2%, extends gains as major producers flag capacity limits
  • Wall St tumbles as weak consumer confidence stokes growth worries
  • Buffett's Berkshire buys more Occidental shares, raises stake to about 16.4%
  • GBP/USD: Pound will need the support of a hawkish central bank – Scotiabank
  • EURJPY Near Term: Upside favored

 

 

Sterling holds ground despite Brexit risks and economic woes 

 

The British pound ticked higher against the dollar on Tuesday and was stable against the euro, even amid flaring Brexit-related risks and a murky economic backdrop. 

After flattish early trading, by 0846 GMT the currency was up 0.16% versus the dollar at $1.22850 , and 0.06% lower against the euro at 86.215 pence .

Attention instead remains on the UK economic backdrop, which saw inflation hit a 40-year record of 9.1% last month, the highest level of the G7 countries.

 

 

COMMODITIES

 

 

Gold steadies as traders await central bank cues 

 

Gold prices steadied on Tuesday, despite an uptick in the dollar and U.S. Treasury yields, as investors awaited policy cues from the ECB central bankers’ forum underway in Portugal. 

Spot gold was little changed at $1,822.19 per ounce. U.S. gold futures ticked lower 0.1% at $1,822.8.

Traders are looking out for any indications about the outlook for inflation and then comments from the Fed, the ECB, on how they’re going to approach this, Erlam added.

Gold seemed to hold its ground despite a reversal upward in the dollar , which usually dims bullion’s appeal for overseas buyers, and a climb in U.S. 10-year Treasury yields.

 

 

ENERGY

 

 

Oil rises 2%, extends gains as major producers flag capacity limits 

 

Oil prices rallied for a third day on Tuesday as major producers Saudi Arabia and the United Arab Emirates looked unlikely to be able to boost output significantly while Western governments agreed to explore ways to cap the price of Russian oil.

Brent crude futures climbed $2.90, or 2.5%, to $116.28 a barrel by 12:33 p.m. EDT (1633 GMT). U.S. West Texas Intermediate (WTI) crude rose $2.35, or 2.1%, to $111.92 a barrel.

Both contracts extended the previous session's gains of nearly 2% after the Group of Seven economic powers vowed to ratchet up existing Western pressure on Russia from sanctions over its invasion of Ukraine.

 

 

 

STOCKS

 

 

Wall St tumbles as weak consumer confidence stokes growth worries 

 

Wall Street's main indexes tumbled in midday trading on Tuesday as a sharp drop in consumer confidence brought to the fore growth risks from rising inflation.

The Dow Jones Industrial Average (.DJI) and the S&P 500 (.SPX) shed the initial gains from a rise in bank shares as the latest batch of economic data raised doubts on the U.S. economy's resilience to withstand hefty interest rate hikes from the Federal Reserve.

The consumer confidence index dropped 4.5 points to a reading of 98.7 in June, a Conference Board survey showed, as consumers anticipated economic growth would weaken significantly in the second half of the year due to rising inflation.

 

 

Buffett's Berkshire buys more Occidental shares, raises stake to about 16.4% 

 

Warren Buffett's Berkshire Hathaway Inc (BRKa.N) said on Monday it has purchased another 794,389 shares of Occidental Petroleum Corp (OXY.N), giving the conglomerate a nearly 16.4% stake in the Houston, Texas-based oil company.

The purchases were made in multiple transactions and cost about $44 million, Berkshire said in a regulatory filing. The share purchases come nearly a week after Berkshire bought 9.6 million Occidental shares.

Berkshire, the largest individual shareholder in Occidental, now owns about 153.5 million shares worth about $9.04 billion, based on Occidental's Monday close.

 

 

ANALYSIS

 

 

GBP/USD: Pound will need the support of a hawkish central bank – Scotiabank 

 

“There are no domestic drivers for GBP price action until tomorrow’s address by BoE Gov Bailey where we’re looking for confirmation that the bank will tighten by 50 bps in Aug. With weak UK growth and global recession fears, the GBP will need the support of a hawkish central bank.” 

“Markets have set a high bar for the BoE with 165 bps in hikes expected by year-end, so further downside on the crosses for the GBP looks more likely.”

 

 

CHART

 

 

EURJPY Near Term: Upside favored

Technical View: Long position above 142.8. Target 144.8. Conversely, break below 142.8, to open 142.

Comments: The pair is expected to resume advance after correction.

 

 

 

 

Source: Trading Central 




 

CALENDAR

 

 

*Times in GMT

 

 

 

 

Source: FX Street Economic Calendar


Footnotes
https://www.reuters.com/markets/europe/sterling-holds-ground-despite-brexit-risks-economic-woes-2022-06-28/
https://www.cnbc.com/2022/06/28/gold-markets-russia-dollar-treasury-yield.html
https://www.reuters.com/business/energy/oil-climbs-major-producer-uae-says-it-has-no-spare-capacity-2022-06-28/
https://www.reuters.com/markets/europe/futures-rise-easing-china-covid-curbs-lift-travel-leisure-stocks-2022-06-28/
https://www.reuters.com/markets/deals/buffetts-berkshire-buys-more-occidental-shares-raises-stake-about-164-2022-06-28/
https://www.fxstreet.com/news/gbp-usd-pound-will-need-the-support-of-a-hawkish-central-bank-scotiabank-202206281319