Sterling Slumps on Brexit Uncertainty

GBP

The British Pound lost ground against rivals amid ongoing Brexit uncertainty. The chance of the Eurosceptic Boris Johnson to win the leadership of the conservative party is rising. Investors are concerned that his win could raise the probability of a "no-deal" Brexit, which would be the worst scenario for the British economy. On the other hand, the sluggish economic data coming out from Britain favored the chances of an interest rate cut by the Bank of England especially that the top hawkish central banks are turning dovish and looking forward to easing monetary policy. The GBPUSD fell to a one-week low of $1.2478, the GBPJPY tumbled to 134.82, the lowest since early January, and the EURGBP climbed to a six-month high of 0.9017.

USD

The dollar index which measures the greenback against a basket of major currencies surged slightly to 97.07 as European currencies tumbled. The Euro and the Sterling account for almost 70% of the dollar index basket. As a result, a significant drop in these currencies would support DXY. The ongoing Brexit uncertainty while awaiting the results of the leadership contest is weighing on the pound, especially that the Eurosceptic Boris Johnson is the most fortunate to replace May. On the other hand, the soft economic data from the Eurozone suggests that the European Central Bank will be forced to ease monetary policy soon. The EURUSD dropped to $1.1245, and the USDJPY rose to 108.10. Market participants will be looking forward to the retail sales figures to grasp hints about the economic activity in June.

 Metals

Gold prices continued to trade in a tight consolidation zone above $1400 awaiting fresh drivers. The gold ounce is finding support near the 200-hour exponential moving average and resistance slightly below $1420. The price of a silver ounce extended rally towards a two-week high of $15.44, while palladium drifted lower to $1550.

Oil

Oil prices inched lower after failing to break above last week's high. Last week, hurricane Barry forced US oil companies operating in the Gulf of Mexico to lower their output. Now, these companies are restoring their production where also the shale production is expected to hit a new record high. The West Texas Intermediate crude futures dropped to a low of $59.17, and Brent futures declined to $66.09.

Major Economic Events

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