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Bitcoin bounced back!; Pound rebound?

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Bitcoin bounces backBy Arnaud Masset

Cryptocurrencies surged Tuesday as Bitcoin crossed the US$7,000 threshold for the first time in four weeks. In Asia, the largest cryptocurrency market, Bitcoin hit $7,543 – up 11.6% in less than 10 hours. Ethereum followed and climbed to $ 45 to $514. Total cryptocurrency capitalisation increased almost $30 billion to $300 billion, its highest since mid-June. Given the quick appreciation, a period of consolidation is now likely. In the longer-run, Bitcoin should appreciate as the regulatory background improves.

Reasons behind the rally remain unclear. Regulations are on the move, however. For instance, the US Securities and Exchange Commission will decide on 10 August whether to approve creation of a Bitcoin exchange traded fund (ETF). The Chicago Board Options Exchange (CBOE) has asked for a listing of such products. Technically, the price of Bitcoin seems to have hit bottom. The $5,922 support (low of 2 February) was broken on 29 June, but bulls outnumbered bears as the price quickly bounced back. This morning Bitcoin stumbled at $7,560, the top of March downtrend channel. A break would open the door to $9,180 (200-day moving average), with next resistance at $9,795-10,000 (high from 4 May).

Pound rebound?By Vincent-Frédéric Mivelaz

The Bank of England – given labour markets and June inflation – will tend toward an interest-rate hike in August. The GBP/USD will most likely see a boost in the short-term, which will then fade due to Brexit worries. GBP/USD is approaching its 3 November 2017 range, currently at 1.3083 and heading towards 1.3070.

Although the 3-month unemployment rate for May came in at 4.20%, sterling dropped against its peers amid disappointing wage growth and mounting uncertainties relating to Brexit. Yesterday, by a margin of only 6 votes, the government failed to pass an amendment requiring the UK to negotiate a customs union for goods with the EU in case of a no-deal by the 21 January 2019 Brexit deadline. The government passed a prior amendment, to remain within the EU medicines regulatory framework, by four votes. Prime Minister Theresa May is struggling to maintain support for her Brexit plan. She risks a vote of no confidence.

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