GBP/USD surged 1.16% to 1.302 area overnight backed by breakthrough in Brexit talks.
The EU chief Brexit negotiator Michael Barnier said he was close to offering UK a deal. Technically, GBP/USD has entered into short-term bullish trend, with both of its SuperTrend (10, 2) and 10-Day SMA both flipped upwards, suggesting more upside than downside. A pullback in greenback last and this week also fuelled the rally in sterling. If more constructive news surrounding Brexit talk continue to feed market, optimism will start to build and sterling will have a good chance to ride a bull wave.
US equities rallied for a fourth day as US and Canada are likely to close the Nafta revamp deal by this Friday, following a successful US-Mexico trade talk two days ago. Wall Street was also celebrating a better-than-expected US 2Q preliminary GDP data, which came at 4.2%, beating market expectation of 4.0%. This marks the fastest pace of economic expansion in four years.
Trades should be cautious of a potential technical pullback, however, as technical indicators RSI signalled overbought risk and the S&P 500 Index has come to the upper bound of its ascending channel. Should there be any miss in trade talks this Friday or unexpected geopolitical event, profit-taking activities will be triggered and roll into a correction.
US DoE crude oil inventory fell more than expected last week, sending crude oil prices to the highest level in seven weeks. The stockpile fell 2.56 million barrels, versus consensus forecast of 1.39 million barrels, according to Reuters. A weaker dollar is part of the reason behind oil’s rally recently, due to their negative correlation. Brent oil is trading at around US$ 77.2 this morning, with its immediate support and resistance levels at $73.6 and $80.0 respectively.
By Margaret Yang in Singapore
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