- White House announced that it has reached a better deal
- UK manufacturing number printed a reading which wasn’t overwhelming
- The precious metal itself is under pressure
Trump decided to extend relief from steel tariffs. Apparently, he is still in a process of striking a better deal with European Union, Mexico and Canada and this is why the deadline is pushed until 1st of June. There has been some fruit to his labour as White House announced that it has reached a better deal (agreement in principle) with like of Argentina, Australia and Brazil.Overall, these negotiations are mainly about quotas which would limit the amount of imports or in other words more protectionism.
Having said this, there is still very little when it comes to actually finding the details on this deal. Nonetheless, European markets have taken this as a sign of relief. We are seeing all the major indices in Europe firmly in green, however, investors over in the US aren’t feeling this optimism as the US futures are still trading lower.
Back in the UK, the manufacturing number printed a reading which wasn’t overwhelming at all. UK manufacturing sector is facing feeble growth and the spillover effects from the first quarter could easily impact the bottom line figure for the second quarter. Looking at Sterling, it is just falling off the cliff, it has fallen from its high of 1.4345 to 1.3673 (at the time of writing this article) in no time.
The upward move for the GBP/USD was purely driven due to the reason that investors were thinking that the Bank of England would hike the interest rate once again when they will meet next. This is because the economic data is supporting their stance. However, the reality was very different and today’s number has also confirmed that traders were clearly on the wrong side of the trade because the economy is no-where ready for another rate hike.
The precious metal itself is under pressure despite the fact that Israel has ranched up the geopolitical tensions yesterday. President Benjamin Netanyahu not only attached on Iran during his speech but an actual attack on Syria is also imminent. If that happens, we expect the geopolitical tensions to take a completely new dimension and gold would become the most favourite asset.
