by the FxPro Analyst Team
Oil continues to be under “over supply” pressure resulting in prices dipping to 7 month lows. Yesterday Oil suffered a 2% drop as the increased supply from several key producers undermined OPEC producers deal to reinforce a cut in global output. For those traders following technicals the recent fall in Oil equates to a 20% fall from recent highs signaling official “bearish” territory. In early trading WTI was trading around $43.35pb and Brent was trading just below $46pb.
GBP dropped on Tuesday, and continued to be soft, after Bank of England Governor Mark Carney stated “that there would be no immediate adjustment of monetary policy by the central bank” in a speech he delivered at Mansion House in London. He also stated that “this stimulus is working, and that credit is widely available, the cost of borrowing is near record lows, the economy has outperformed expectations and unemployment has reached a 40-year low”. Because of his comments the market has reacted that an interest rate rise is highly unlikely.
GBPUSD dropped from 1.2753 at 8:00 BST to 1.2631 just before 15:00 BST in response to Carney’s comments yesterday. Overnight GBPUSD has traded in a range of 1.25885 to 1.26345 currently trading near the lows at 1.2590.
Today sees the State Opening of Parliament in the UK. An event normally full of pomp but, due to the snap election, will be somewhat muted. Whilst the Conservative Party is the largest party in Government there are still concerns that they may not gain the support of the DUP in Northern Ireland and gain the slim majority they need to govern without complications from other parties. Regardless, Prime Minister May will have a greatly trimmed down manifesto with the focus being Brexit and the state of the UK economy. We can expect GBP to continue to be under some pressure because of these uncertainties.
EURUSD recovered slightly, after hitting a 3 week low, currently trading around 1.1130. USD also eased against JPY currently trading around 111.19.
At 15:30 GMT the EIA Crude Oil Stocks change (June 16) are released. The consensus is -2.106M with the previous release at -1.661M. Regardless of the figure that is released we are expecting volatility in Crude Oil.