Brexit suspense, oil and gold steady

Crunch time for Brexit

The pound has rebounded a little today as the UK and EU managed to reach agreement on one contentious issue, the Northern Ireland protocol. The resolution means the clauses that threatened to break international law in the UK Internal Market Bill have been removed, whatever the outcome of the Brexit talks.

Some have viewed this as a good omen for the talks, with relations seemingly improved ahead of crunch talks between the two leaders. The fact that this agreement resolves the issue, deal or no-deal, makes others feel a little less certain. The pound is seeing some reprieve but with nerves clearly now kicking in, I expect plenty more volatility in the coming days and a significant plunge if talks collapse this week.

Oil pares gains after OPEC+ deal

Oil prices continue to pull off their highs in the aftermath of the OPEC+ deal. The deal delivered enough to sustain the moves that occurred in the weeks leading up to the meeting but with the group deciding future output on a month by month basis, there’s plenty of opportunity to accelerate the reversal of cuts should the economy perform better than expected. It will be interesting to see how producers respond in the event that US shale comes back online faster than anticipated, given the sensitivities there.

Gold holding above USD1,850

Gold is having a very different December to November, when it plunged in the aftermath of all the positive vaccine news. While nothing has changed on that front, the yellow metal is once again finding some form and has even broken above USD1,850, as US lawmakers work towards a fiscal deal. I do wonder whether it has enough to sustain these moves though, and think another test of the lows shouldn’t be written off. Of course, the Fed next week may give it another helping hand.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Craig Erlam

Craig Erlam

Senior Market Analyst - UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a Market Analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and BNN. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.
Craig Erlam
Craig Erlam

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