Two trades to watch: GBP/USD looks beyond 1.35, WTI gains after US stimulus agreement

Markets are setting out on the front foot after strong gains on Wall Street and a push higher in Asia overnight. A new US stimulus bill and a Brexit deal are boosting sentiment as markets head towards the new year.

Charts (6)

  • Markets are setting out on the front foot after strong gains on Wall Street and a push higher in Asia overnight. 
  • A new US stimulus bill and a Brexit deal are boosting sentiment as markets head towards the new year.
  • Concerns over rapid growth in covid cases could keep the lid on optimism in Europe.

GBP/USD rebounds after steep losses


GBP/USD experienced heavy selling pressure on Monday, falling around 150 pips from its swing high of 13575 as post Brexit euphoria quickly gave way to concerns over the lack of a service sector agreement with the EU and rising covid chaos in the UK.

Today’s more upbeat mood is pressuring the USD. Demand for the safe haven is lagging as US lawmakers push forward with a covid relief package. GBP/USD picked up from session lows of 1.3430 overnight to just shy of the key psychological level of 1.35.

Signs of dip buying favours GBP/USD bulls, the pair bounced off support at 20 sma and is looking to test resistance at the day’s high of 13495 and 1.35 psychological level. The pair has struggled so far to find acceptance above 1.35. However, a sustained move above 1.35 could see yesterday’s high of 1.3575 back in focus ahead of 1.3625 (high 24th Dec).

On the flip side, immediate support can be seen at 1.3430 (20 SMA &daily low) ahead of 1.34 round number and 1.3350 lower band of the ascending channel. A break below 1.3260 (50 sma) would be seen as a key move by the bears.

Learn more about trading forex



US stimulus agreement boosts WTI demand outlook

Oil is on the rise on expectations of rising oil demand as the US could expand covid relief payments and as Brexit finally offers some stability. 

Whilst markets are trading range-bound owing to thin holiday volume, the prospect of larger stimulus aid is lifting sentiment and future demand expectations.

Near term concerns over the covid variant and tighter lockdown restrictions in the US and Europe could limit gains.

US crude inventory data is due later today. Crude stocks are expected to have fallen by 2.1 million barrels.

An OPEC+ meeting on 4th January also hangs over the market.

WTI shows mild gains and is hovering near session highs of $48 as it keeps the 20 and 50 sma on 4 hour chart as immediate support. Should this support hold a move towards $48.50 and $49 the monthly high could be on the cards, ahead of $50 round number and psychological level.

A break below the 20& 50 sma could open the door to $47, the 100 sma and $46.15 last week’s low, negating the bullish trend. 

Learn more about trading commodities.

More from GBP

Disclaimer

This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.

GAIN Capital Singapore Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the GAIN Capital group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), GAIN Capital Singapore Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact GAIN Capital Singapore Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.

In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither GAIN Capital Singapore Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.

GAIN Capital Singapore Pte. Ltd. is not under any obligation to update this report.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit cityindex.com.sg for the complete Risk Disclosure Statement.