The pound continues to gain ground against the dollar and the euro, reaching fresh highs versus the two currencies during early Wednesday trading. The UK’s successful vaccine rollout, especially when compared with Europe’s suboptimal deployment, is allowing the British authorities to establish a roadmap to abandoning any COVID-related restrictions by as early as June, with a big economic rebound expected as a result. This improvement in outlook, for a country that until recently was weighed down by the shackles of Brexit and an at times shambolic response to the pandemic, is driving large flows of capital back into UK assets, which are behind the pound’s current vitality.
Most European equities continued their consolidation on Wednesday in contrast to extended losses in the Asian session overnight. Fed Chairman Jerome Powell tried to “reassure” investors yesterday saying the economic recovery still has a long way to go with dovish policies remaining in place as long as necessary. Investors don’t seem to be afraid about the stock market as a whole but fear the prospect of sharp extended bearish corrections on certain overbought stocks, like tech ones. This explains the current sector-based rotation from investors who have been switching their exposure from the former “defensive” tech sector to industrial shares. Having said that, traders are likely to cautiously wait for today’s US Crude Oil Inventories, due later in the afternoon, which could increase market volatility towards cyclical assets and other energy shares.
The FTSE-100 is one of the best performing indices today despite a bearish signal sent by the break-out of its bullish trendline. This bullish reaction over the strong 50% Fibonacci ratio will have to be confirmed through the day to keep the possibility of higher highs alive in the short-term.
Experienced writer and journalist, working in the global online trading sector, Steffy is the Editor of LeapRate. She has previous experience as a copywriter and has been with the company since January 2020. Steffy has a British and American Studies degree from St. Kliment Ochridski University in Sofia.
