Market Review - Fundamental Perspective - 08 May 2018

Global equities started the week with slight gains as US 10y Treasury yields began to approach the 3% level again. In FX, volumes were light yesterday given the UK’s bank holiday, but the USD continued to strengthen having rallied for the past three weeks
Crude oil rose to a 3-year high yesterday on various media reports (Bloomberg) that President Trump will today announce whether or not to extent Iranian sanction waivers. Barclays research “think the current Iran deal will not survive under President Trump”
GBP came under pressure last week amid disappointing data prints, political concerns and diminishing expectations for a BoE May rate hike. This week’s focus is on the BoE meeting on Thursday where Barclays Research does not expect a change in policy
Our traders currently see GBPUSD support at 1.3480 ahead of its year-to-date lows of 1.3450, while resistance comes in at 1.3670 ahead of 1.3725. EURGBP support lies at 0.8760 ahead of 0.8690 and 0.8625, and resistance comes in at 0.8840-80
In Italy, the third round of government consultations failed to form a coalition yesterday. Barclays Research’s baseline is now that snap elections this year are likely. Early ballots would change the outlook of political risk: under certain circumstances, an outright anti-system government between M5S and L could be increasingly likely after the next elections
The Argentine peso came under increased pressure last week. After repeated policy rate hikes from the central bank over the past two weeks, we expect the Argentine peso to find some stability around its current level

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