US equities gained yesterday on the back of more conciliatory tones from Treasury Secretary Mnuchin on the US-China trade negotiations, while Asian stocks stalled possibly waiting for more details. In FX, the USD Bloomberg Spot Index fell as US yields retreated from their recent highs.
Geopolitical tensions seem to be easing as the US and China released a joint statement agreeing to “substantially reduce the US trade deficit in goods with China”
In terms of next steps, US Commerce Secretary Wilbur Ross will visit China soon, and China’s Foreign Minister Wang Yi is expected to visit US this week.
GBP had an offered tone yesterday but traded range-bound overnight despite Boris Johnson reportedly warning that an early election would constitute a risk for the Conservatives (Bloomberg).
Focus this morning will be on BoE MPC members Ramsden, Saunders, Vlieghe and Governor Carney testifying to the treasury select committee.
Our traders currently see GBPUSD support at 1.3390 and resistance at 1.3560 and 1.3625. EURGBP support comes in at 0.8690-0.8715 while resistance lies in the 0.8780-0.8810 area.
As Italy is moving closer towards a new government, focus turned to reports that 5SM and Lega suggested Law Professor Giuseppe Conte for the role of Prime Minister (Reuters). Barclays Research expect President Mattarella to make a decision on how to move forward this week, possibly as early as today.
In Venezuela, President Maduro was unsurprisingly proclaimed winner of Sunday’s elections, but this is being contested by the international community which is expected to retaliate with new sanctions. Indeed, reports (Bloomberg) suggested that President Trump had issued an order prohibiting purchases of Venezuelan debt, including PDVSA.