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Inflation and Brexit in the spotlight for traders

November 24, 2021

GBP/USD: The pound rose on Monday but lagged behind other risk-linked currencies as investors focused on talks over post-Brexit trade arrangements for Northern Ireland as well as the likelihood of the Bank of England raising rates next month. Relations between Britain and the European Union have deteriorated in recent weeks after Britain, unhappy with the Brexit deal it signed up to in 2020, threatened to trigger an emergency clause known as Article 16 of the Northern Ireland Protocol, potentially leading to a trade war. But the European Commission’s Sefcovic said that he is «absolutely convinced» that Britain and the European Union can break their impasse. Immediate support is seen at 1.34. A breakout below could take the pair towards 1.3340.

SELL STOP 1.34/TP 1.3340/SL 1.3420


USD/CAD: The Canadian dollar rose against the greenback on Monday, recouping some of last week’s decline as China reported stronger-than-expected economic data and Bank of Canada Governor Tiff Macklem said Canada’s economy is moving closer to full capacity. U.S. crude oil futures settled 0.1% higher at $81 a barrel after hitting their lowest level 10 days earlier. The «loonie» was trading 0.3% higher at 1.2509 to the greenback. On Friday, it touched its weakest intraday level in more than five weeks at 1.26. Immediate support is seen at 1.25. A breakout below could take the pair towards 1.2430.

SELL STOP 1.25/TP 1.2430/SL 1.2530


USD/JPY: The dollar edged lower against the Japanese yen on Monday amid inflation worries. Inflation has run hotter than expected in recent months, bolstering the argument that the Fed will have to act more aggressively to tame rising consumer prices. Higher U.S. rates tend to make some dollar-denominated assets, like Treasuries, more attractive to yield-seeking investors. Investors likely will be closely watching fresh data on U.S. retail sales out on Tuesday, after a report out Friday showed consumer sentiment hitting its lowest point in a decade, due in part to inflation. Strong resistance can be seen at 114.25. A breakout to the upside can trigger growth towards 115.

BUY STOP 114.25/TP 115.00/SL 114.00