On the opening of the American trading session on Tuesday, the GBP/USD currency pair is showing its strength to claim its day. In particular, it manages to defend small bids over the 1.3200 level. Recent economic indicators have rattled market sentiment. This is particularly the case given the precarious state of the British economy and current global trade tensions.
The United Kingdom’s unemployment rate held firm at 4% for the quarter ending in February. Yet, weak average earnings data has helped to keep any gains for Pound Sterling in check. The environment of stagnant worker wage growth indicates consumers likely do not have newfound purchasing power, which could be a headwind to broader economic activity.
At the same time, the persistent trade war with China still looms significantly over market conditions. Global investors are mindful of any moves that might further inflame tensions between the two economic superpowers. This unease about the evolving trade negotiations has led to schizophrenic feelings among most asset classes.
The EUR/USD pair has seen difficulty in extending that momentum in the European session, trading below the key 1.1350 level. The euro’s weakness can be attributed to a series of economic data releases that have raised concerns about the Eurozone’s economic health. The ZEW Survey – Economic Sentiment plummeted to -18.5 in April. This drop from the prior 39.8 reading marks a significant drop in investor confidence.
Now even with all these challenges, quite a few asset classes have performed favorably. Bitcoin (BTC) has made gains, trading just above $85,500 at writing on Tuesday. Bitcoin’s skyrocketing price comes as investors and consumers have shown more and more interest in cryptocurrencies. Economists attribute this increase to the global expansion of M2 money supply. This substantial increase in money supply can only mean good things to come—bullish trends for both Gold and Bitcoin.
Gold is holding relatively stable, moving up and down around the $3,200 mark after some small declines on Monday. Fears over a worsening global trade war have receded and bullish risk appetite has limited Gold’s fortunes. Market participants are focused on tariff headlines with a keen eye, as these emerging stories will make or break Gold prices.
On the industrial production front, recent data out of the Eurozone showed an acceleration of 1.1% month-on-month in February. That kind of growth would likely strengthen the euro. Yet, despite these gains, larger macroeconomic factors and trade tensions still loom over it.
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Given the rapidity of market developments, investors need to remain vigilant. They need to try to understand the myriad other factors that control the gun-shy market’s emotions. While that may challenge conventional wisdom, recent data points underscore the difficulties of reading the financial markets’ tea leaves. This complexity is further compounded by geopolitical tensions and economic uncertainty.