Sterling Surges As “Remains” Power Ahead, Oil Rally Weighs On USD
On Thursday (26/5), the pound rose for the third day in a row, reaching a three-week high against the greenback on the results of a recent poll by former Conservative lawmaker Michael Ashcroft. The poll indicated that nearly 65% of voters expressed their willingness towards the U.K remaining in the European Union after the June 23 referendum.
This figure represents an increase from the reading of 55% support in the previous poll. Moreover, following other British business executives, BT Group Plc Chairman Michael Rake commented about the referendum on EU membership. He defended his ground against Brexit and pointed out that UK economy would be adversely affected if Brexit really happened.
The Office for National Statistics has just reported the second estimate for quarterly GDP. The data shows an improvement of 0.4% in UK GDP, showing the expansion of UK economy for 13 consecutive quarters since Q1/13. Household spending climbed 0.7 percent, the fastest pace in almost a year. In contrast, preliminary business investment fell 0.5% as the expenditure on non-residential buildings stumbled
Brent oil prices moved above $50 a barrel on Thursday for the first time since November 4, 2015. Yesterday, U.S. crude oil inventories for the week ending on May 20 witnessed a bigger draw than expected. U.S crude stocks plummeted 4.2 million barrels to 537.1 million, the steepest weekly slide in seven weeks. Nevertheless, the recovery is anticipated to be short lived, since U.S shale producers will soon burst back onto the market, enhancing the U.S oil supply. This crude rally may pose a threat to the Fed’s decision on increasing interest rates in the upcoming meeting in June or July.
U.S Initial Jobless Claims in the week ending on May 20 were reported earlier today, at 268,000 people claiming unemployment insurance for the first time, compared with the forecast of 275,000. This is the most positive reading in the last 4 months, showing a strengthening labour market. Before the widely watched FED meeting next month, the Non-farm Payrolls data due next week is supposed to be the last major data that shall create a headline effect on the Fed’s rate hike decision.
However, before that, investors will be keeping a close eye on Friday’s Japanese consumer prices report and comments the same day by Fed Chair Janet Yellen for more clues about the rate outlook.
Fig. GPBUSD D1 Technical Chart
In general, GPBUSD is following an uptrend, with the pound on track to strengthen against the greenback. RSI has soared to as high as 63.7946, signaling that the bull is still overwhelming. The Stochastics chart shows %K line (blue line) has reached the overbought zone before %D line (red line). The signal trend indicator also supports the bullish trend with the green parabolics band moving beneath the price chart. The bullish force is much stronger and the pair is anticipated to climb continuously.
Buy at 1.47038, Take profit at 1.47720, Stop loss at 1.46280