Stock markets recover, Pound Trumped while Gold melts
Investors were placed on an emotional rollercoaster ride this week as trade tensions between the United States and China intensified.
The Trump administration’s latest threats to impose tariffs on an additional $200 billion of Chinese goods initially dealt a blow to global sentiment, rekindled jitters and sparked risk aversion. However, global financial markets later stabilised on expectations over the United States and China potentially reopening trade talks. It must be understood that the back-and-forth trade threats between the two largest economies in the world has cultivated uncertainty and fueled anxiety across global markets.
Interestingly, Asian and European stocks were mostly higher on Friday as investors yet again attempted to shrug off trade tensions. Could markets be turning increasingly numb to global trade developments? This may be the question of the quarter if stock markets and riskier assets continue to push higher despite trade tensions escalating. concerns over whether the European Union will even accept the Brexit White Paper. Fundamentally, the odds seem stacked against the Pound with Brexit risk, trade war fears and political uncertainty potentially encouraging investors to scale back bets on a BoE rate hike this quarter.
As regards the technical picture, the GBPUSD remains heavily bearish on the daily charts with prices trading around 1.3100. Sustained weakness below this level could encourage a decline towards 1.3070 and 1.3000, respectively.