Learn To Trade
 
Indicators & Chart Patterns

Deepen your knowledge of technical analysis indicators and hone your skills as a trader.

Find your detailed guides here
Trading Glossary

From beginners to experts, all traders need to know a wide range of technical terms. Let us be your guide.

Learn More
Knowledge Base

No matter your experience level, download our free trading guides and develop your skills.

Learn More
Learn To Trade

Trade smarter: boost your skills with our training resources.

Create a live account
Market Analysis
 
Market News

All the latest market news, with regular insights and analysis from our in-house experts

Learn More
Economic Calendar

Make sure you are ahead of every market move with our constantly updated economic calendar.

Learn More
Technical Analysis

Harness past market data to forecast price direction and anticipate market moves.

Learn More
Live Webinars

Boost your knowledge with our live, interactive webinars delivered by industry experts.

Register now
Market Analysis

Harness the market intelligence you need to build your trading strategies.

Create a live account
Partnership
 
Affiliate Programme

Grow your business and get rewarded. Find out more about our Affiliate Programme today.

Learn More
Money Manager

Increase your income and get compensated for your trading knowledge with ThinkInvest, putting you in control.

Learn More
API Trading

Create your own trading platform or data tools with our cutting-edge APIs.

Learn More
Introducing Broker

ThinkMarkets ensures high levels of client satisfaction with high client retention and conversion rates.

Learn More
White Label

We supply everything you need to create your own brand in the Forex industry.

Learn More
Regional Representatives

Partner with ThinkMarkets today to access full consulting services, promotional materials and your own budgets.

Learn More
Partnership

Plug into the next-gen platforms and the trades your clients want.

Create a live account
About ThinkMarkets
 
About Us

Find out more about ThinkMarkets, an established, multi-award winning global broker you can trust.

Learn More
Security of Funds

Security of your funds is our number one priority. Find out more about our insurance policy with Lloyd's of London.

Learn More
Trading Infrastructure

When it comes to the speed we execute your trades, no expense is spared. Find out more.

Learn More
ThinkMarkets News

Keep up to date with our latest company news and announcements.

Learn More
Contact Us

Our multilingual support team is here for you 24/7.

Learn More
About ThinkMarkets

Global presence, local expertise - find out what sets us apart.

Create a live account
search
Create account

Pound and crude extend rally, stocks mixed ahead of US CPI

Fawad Razaqzada Fawad Razaqzada 10/02/2021
Pound and crude extend rally, stocks mixed ahead of US CPI Pound and crude extend rally, stocks mixed ahead of US CPI
Pound and crude extend rally, stocks mixed ahead of US CPI Fawad Razaqzada
The pound has hit a fresh multi-year high today; the dollar has weakened further ahead of US CPI; stocks have opened on the backfoot in Europe despite US index futures extending their gains, and Brent crude oil has reached its best level since January last year.

In other words, nothing has changed, with sentiment towards risk remaining overall positive. With the lack of any major macro news this week, any dips in risk-sensitive assets are likely to be supported – not least the pound.  

Pound continues good run of form

The GBP/USD has today risen its best levels since April 2018 as investors continue to pile into the racier pound and out of the US dollars amid ongoing “reflationary” and “risk-on” trades. The pound has been pushing up across the board since the turn of the year due to a no-deal Brexit being avoided and the UK is currently well ahead of many countries in the race to vaccinate its population. Together, these developments have boosted expectations that the UK economy could potentially recover quicker and stronger once lockdowns end.

Stronger pound holding FTSE back – for now

The above expectations have helped to push the pound to repeated new multi-year highs, but this has been slightly negative news for the FTSE whose constituents earn big portions of their profits abroad – in euros and dollars, etc. Thus, when foreign earnings from these multinational corporations are exchanged for the pound, their profits appear less rosy than they do in dollars or euros. The stronger pound is also negative for UK exports, as it makes UK goods and services appear dearer overseas.

However, with expectations of a strong recovery in UK economy growing, the potential for stronger domestic demand recovery should help UK-listed stocks offset the negative impact of the ongoing exchange rate appreciation. And with UK and global monetary conditions remaining very loose, while fiscal spending is also expansionary, conditions remain favourable for UK stocks. So, the FTSE should, in my view, go higher over time and catch up with the other European indices.

Future pickup in inflation is the key risk for stock markets

There has been a lot of talks about inflation rising due to pent up demand, significant government spending, extremely loose monetary conditions and rising oil prices. While the latest US CPI reading is likely to be tepid, and the Fed has said it will allow prices to rise above average for a while, this could come back to haunt investors at a later point in time. If in a couple of quarters down the line the market starts to believe inflation is going to accelerate sharply, requiring tighter monetary conditions, that’s when we are mostly likely to see stocks dropping back from their all-time highs in the US, if not before.
 
US CPI, central bank speeches

The macro calendar is quite quiet but will have latest US CPI and speeches by Fed Chair Powell and BoE Governor Baily all coming up later. For what it is worth, US CPI for the month of January is expected to come in at +0.3% month-over-month following a +0.4% increase the month before. Year-over-year, CPI is expected to print 1.5%, up from 1.4% y/y previously.
Any opinions, news, research, analyses, prices or other information contained on this website is provided as general market commentary and does not constitute investment advice. ThinkMarkets will not accept liability for any loss or damage including, without limitation, to any loss of profit which may arise directly or indirectly from use of or reliance on such information.

Learn more to earn more

our Education center

Related articles:

Risk sentiment positive ahead of US retail sales

By Fawad Razaqzada

15/04/2021

Crude rallies on big US oil crude draw; deman...

By Fawad Razaqzada

14/04/2021

Stocks and cryptos extend rally ahead of bank...

By Fawad Razaqzada

14/04/2021

Quiet start to busy week: Everything you need...

By Fawad Razaqzada

12/04/2021

Week Ahead: April 12, 2021

By Fawad Razaqzada

09/04/2021

Meet our contributors
Fawad Razaqzada
×
Fawad Razaqzada
Market Analyst, London

Fawad is an experienced analyst and economist having been involved in the financial markets since 2010, producing market commentary and research for a number of global FX, CFD and Spread Betting brokerage firms. He leverages years of market knowledge to provide retail and professional traders worldwide with succinct fundamental & technical analysis. Fawad also offers trading education to help shorten the learning curves of developing traders.
 
His colleagues consider him an expert at reading price action on the charts. This together with his deep understanding of economics and fundamental analysis, and trading experience, puts him in a great position to forecast short term price movements. Fawad covers a wide range of markets, including FX, commodities, stock indices and cryptocurrencies and his comments are regularly quoted by the leading financial publications such as Reuters and Market Watch. In addition to ThinkMarkets, Fawad also provides analysis and premium trade signals on his own website at TradingCandles.com.
 
 

Carl Capolingua
×
Carl Capolingua
Market Analyst, Melbourne

Carl has over 20 years' experience in financial markets and has held senior analyst roles at a number of financial institutions. Specialising in Australian and US stock markets in particular, Carl uses a top-down approach to assess the global macro picture before using both technical and fundamental techniques to select stocks. He regularly appears as an expert commentator on a number of media outlets throughout the Asia-Pacific region.
 
 
 

Fawad Razaqzada
Fawad Razaqzada
Fawad is an experienced analyst and economist having been involved in the financial markets since 2010, producing market commentary and research for a number of global FX, CFD and Spread Betting brokerage firms.
Carl Capolingua
Carl Capolingua
Carl has over 20 years' experience in financial markets and has held senior analyst roles at a number of financial institutions.

Feel confident?

Any opinions, news, research, analyses, prices or other information contained on this website is provided as general market commentary and does not constitute investment advice. ThinkMarkets will not accept liability for any loss or damage including, without limitation, to any loss of profit which may arise directly or indirectly from use of or reliance on such information.
Back to top