The boost in oil prices following the Beirut blast pushed WTI crude above its 200-day moving average of $43 pb on Wednesday, but decent offers blocked the way higher above this level. Supply side shocks tend to have a short-lived positive impact on oil prices, provided that the global oil market is already flooded with excess supply. Only an upside revision in demand expectations could carry the oil rally sustainably higher. Otherwise, investors will continue hunting top selling opportunities to push the price of a barrel near and below the $40 handle.
The EURUSD nearly, fully recovered early-week losses against a broadly softer US dollar and is preparing to attack the 1.19 offers for the second straight week. The pair’s upside potential mostly depends on the global US dollar performance. Further slide in the greenback will pave the way for an advance toward the 1.20 handle.
Cable consolidates gains above the 1.31 mark on the back of a weaker US dollar, as well. The highlight of the day is the Bank of England (BoE) policy decision. The BoE is expected to maintain its interest rates and asset purchases policy unchanged at this month’s meeting, but there is a chatter that moving toward the year-end, the bank should allow banks to borrow at negative rates, or increase the volume of funds available at the bank rate to further relax the financial conditions. Hence, the BoE doves should bring a certain downside pressure on sterling against the dollar and the euro.
