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Oil shines ahead of OPEC meeting, while cable dips below the 1.30 level.

The market was off to a quiet start following the recent bout of volatility. Risk sentiment is improving and the Japanese Yen is trading steady despite news that North Korea conducted another missile test over the weekend.

 

In terms of economic data released during the Asian session, Japan’s trade balance came to a surplus of JPY 481.7 B for the month April compared to popular expectations of an expected surplus JPY 521 B.

 

Cable dipped against the greenback below the 1.30000 level as a result of headlines regarding Brexit. Speaking to the Times on Sunday, UK Brexit Secretary David Davis warned that Britain will walk away from Brexit negotiations unless Brussels drops demands to charge the UK 100 billion euros to leave the European Union.

 

The euro remained close to a six-month high against the dollar, hitting an early session high of $1.1209 before edging lower. A series of strong Eurozone data recently has been supportive of the single currency, while in contrast, some soft data out of the US, combined with difficulties facing the Trump Administration, have weighed on the greenback.

 

Regarding commodities, oil rice continues to market higher ground on optimism that the May 25 OPEC meeting could potentially result in an extension of the current agreement to limit output. WTI oil reached as high as $51.22 a barrel in Asian trading.

 

 

GBP/USD Daily Outlook

 

 

GBP/USD is still staying in tight range below 1.3047 and intraday bias remains neutral. With 1.2844 minor support intact, further rise remains mildly in favor. Nonetheless, as we are still viewing price actions from 1.1946 as a corrective move, we'd expect upside to be limited below 1.3444 resistance to bring near term reversal. On the downside, break of 1.2844 will indicate short term topping and turn bias back to the downside for 1.2614 resistance turned support first.

 

In the bigger picture, fall from 1.7190 is seen as part of the down trend from 2.1161. There are signs of reversal, like breaking of 55 week EMA, weekly MACD turned positive, and monthly MACD crossed above the signal line. But still, break of 1.3444 resistance is needed to confirm medium term bottoming. Otherwise, outlook will remain bearish for extend the down trend through 1.1946 low.

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