Sterling remains the weakest among major currencies. Oil prices affected by mixed factorsPosted on Thursday, August 9 2018 at 4:43 pm GMT+0000
Sterling remains the weakest among major currencies
Sterling is by far the weakest among major currencies. Today it dipped below the 1.2900 level and touched a fresh one-year low.
The pound started its decline immediately after the BoE interest rate rise last week, and this is what confirms the currency’s weakness.
UK is facing political issues and not economic problems for
The UK is still facing political turmoil for now. Speculation for a no-deal Brexit remained front and center, because a no-deal Brexit will generate economic problems.
A no-deal Brexit will have very negative impacts at least in the medium term and until new trade agreements with other countries such as the United States, China and others, can be generated.
Oil prices affected by mixed factors
Oil prices rebounded earlier this week, weighed down by US sanctions on Iran, the dollar index’s retreat and the drawdown in the US inventories.
Indeed, the are many mixed factors that are affect oil prices and performance. The rise in production by OPEC producers negatively affects prices. But on the other hand, the production-cut from other countries and the threat of cutting supplies, in addition to the possibility of a reduction in Iran’s oil exports that might be due to the sanctions, positively affect prices.
The US president’s demand from world countries to stop dealing with Iran and buying it’s oil production, of course, have affected prices, but China-US spat should remain at odds as China is likely to increase its Iranian oil purchases.
Overall, I expect any gains in oil prices to remain limited in the coming period and I expect prices to continue consolidating between 77 and 71 levels. A break below 71 will pave the way for further declines towards 67 in the medium term.