Market Review - Fundamental Perspective - 09 May 2018

US President Trump announced the US withdrawal from the Iran nuclear deal yesterday. All the US sanctions that were lifted under the JCPOA will be reinstated. Market reaction was relatively muted as the US exit was somewhat expected:
Safe-haven currencies, including the USD, rallied on back of the headlines, while crude oil ended the day mostly unchanged despite a volatile session
The implications of the US withdrawal from the Iran nuclear deal are wide-ranging. Barclays Research thinks that “the withdrawal is likely to bolster market concerns of a potential supply-side shock, reinforcing the recent de-risking trend in FX markets and strengthening of the USD”
Regarding the oil price, the renewed sanctions could threaten Iran’s ability to market its oil, but Barclays Research thinks that “the geopolitical consequences would likely play a larger and long-lasting role in pushing oil prices higher”
GBP had a volatile trading session yesterday amid headlines of UK PM May facing conflicts regarding Brexit proposals. Our traders currently see GBPUSD support at 1.3480 ahead of 1.3450, while resistance comes in at 1.3600 ahead of 1.3670 and 1.3725
The EUR dropped to a new 4-month low this morning on the back of increased political uncertainty in Italy. Given that the recent government consultations failed to form a coalition, another election is increasingly likely

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