STERLING AND FTSE 100 IN SPOTLIGHT AS UK POLITICAL TEMPERATURES RISE

The British pound rose after the long weekend in the UK. The main catalyst for the pair was the political situation in the country, where Boris Johnson is facing a vote of no confidence. According to the WSJ, the Prime Minister is set to face the vote today as the ruling Conservative Party worries about the multiple Downing Street parties during the Covid-19 pandemic. Still, analysts believe that Johnson will win the vote, meaning that he can’t be challenged for another year. In the past, many conservative prime ministers have won no confidence votes and resigned later.

American futures rose as investors hope that the government will remove some of the tariffs implemented by Donald Trump. This confidence rose after Biden’s Commerce Secretary said that tariffs on some household goods will likely end. The government will leave tariffs on some key item like steel and aluminum intact. Meanwhile, investors are still watching economic data that will have an impact on Fed’s decision. On Friday, data showed that the unemployment rate remained close to a record low while wages rose by 5.2%. On Friday, the US statistics agency will publish the latest consumer inflation data.

European stocks rose on Monday as China continued easing Covid-19 restrictions. The broader Stoxx 600 index rose by 0.7% while in the UK, the FTSE 100 rose by 0.8%. According to Bloomberg, Beijing and Shanghai continued speeding their reopening. Restaurants in Beijing reopened on Monday while schools will reopen in the coming week. This happened as the number of infections moved downwards nationwide. For example, Tianjin has not reported any local cases in the past three days. Stocks also rose after positive regulations news in China. Authorities eased restrictions on DiDi, the ride hailing company.

GBPUSD

The GBPUSD pair started a bullish trend as political temperatures in the UK rose. The pair rose to a high of 1.2567, which was the highest level since Friday. The pair moved above the 25-day moving average while the Relative Strength Index (RSI) has moved close to the oversold level. It is above the ascending trendline shown in red. Therefore, the pair will likely keep rising as bulls target the next key resistance at 1.2600.

EURUSD

The EURUSD pulled back slightly as investors wait for the upcoming interest rate decision by the European Central Bank (ECB). The pair is trading at 1.0727, which was lower than the intraday high of 1.0750. It is trading at the 25-day moving average while the MACD and the RSI are at the neutral level. The pair will likely keep falling as bears target the next key support level at 1.0710.

ETHUSD

The ETHUSD pair has been in a strong bullish trend in the past few days. It is trading at 1,903, which is higher than last week’s low of 1,731. The pair has moved slightly above the 25-day moving average while the Relative Strength Index and MACD have moved upwards. The pair is slightly below the descending trendline shown in blue. A move above the blue line will signal that there are enough bulls in the market. The key resistance point to watch will be at 1,970.