On the currency market recently there has been a lot of talk about the situation on the US dollar or the euro, meanwhile the situation on the British pound seems to look even more interesting. The GBP/USD exchange rate has been rising steadily for several days, and the British currency seems to be making up for the losses that occurred after the Brexit referendum.
On Wednesday, the British Pound against the US Dollar touched the $1.385 level for the first time since April 2018. One of the main factors helping the GBP seems to be the prospects for a faster economic recovery in the UK, helped by the COVID-19 vaccine launch and massive fiscal stimulus, as well as diminishing expectations of negative interest rates. The Bank of England said last week that it would give UK lenders at least six months before negative interest rates become a possibility, while reserving that it was not thereby sending a signal about the likelihood or imminence of such a policy. GBP/USD has already risen more than 20 percent since its March low.
Oil stays high
On the commodities market, attention is focused on oil. A barrel of WTI costs around USD 58 and Brent is still at USD 60. Prices are therefore at their highest in a year, and today oil futures were little changed and consolidating after a seven-day rally that was the longest since February 2019. The price rise may have been supported by hopes of a global economic recovery, aided by large stimulus packages around the world. At the same time, Saudi Arabia unilaterally cut crude supply in February and March. API data released on Tuesday showed U.S. crude inventories fell by 3.5 million barrels last week, while the market had forecast an increase of 1.3 million barrels.
Other cryptocurrencies moved up behind bitcoin
In the cryptocurrency market, bitcoin is below the $47,000 level, which is close to its all-time record, which was set after the news that Tesla acquired BTC worth $1.5 billion. In contrast, we may observe increases on ETH/USD and LTC/USD. ETH has broken its record, reaching $1838. Litecoin, on the other hand, a currency similar to bitcoin, also with limited supply but with a much faster network, is rising to $195. This is the highest price since March 2018, as the market surpassed the peak of January this year.
Interestingly, as the monetary base increases in the United States, but also globally, the capitalization of tokens based on the US dollar - USDT - increases. These have a 1:1 coverage in USD. This could mean that the bull market in cryptocurrencies continues thanks to the monetary expansion of central banks, and it is the changes in monetary policy that could be crucial for the future trends in these markets, but not only in these markets. The bull market in equities or commodities also seems to be proportional to the increase in money supply, which seeks an outlet in financial assets.
Daniel Kostecki, główny analityk Conotoxia Ltd. (usługa Forex Cinkciarz.pl)
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