The British pound moved away from yesterday’s fresh 31-year low at 1.3118, as risk aversion triggered by the shock of Brexit eased, but remaining in strong negative mode. Yesterday’s fresh bearish extension signaled that the pound hasn’t bottomed yet and further weakness could be anticipated.
Shockwaves from Brexit are expected to further impact the world markets, which remain highly volatile.
Calming words from British FinMin Osborne yesterday, who said the British economy is strong as it could be, are not seen enough to stabilize the situation on strong post-Brexit political and economic confusion.
British economy has been hit strongly by referendum decision, with further uncertainty and strong downside risk expected, despite the comments of political leaders who said that the pound and markets are stable and people’s pensions are safe.
In the latest blow for Britain, rating agencies Standard & Poor’s and Fitch downgraded its sovereign credit standing, expecting that the economy would be hurt by decision to leave European Union.

Global stocks registered strong fall, as European shares had their worst two-day fall and world stocks, measured by MSCI index, registered the worst two-day fall since the collapse of US investment bank Lehman Brothers in 2008 crisis.
World stocks lost only on Friday about $2.8 trillion of their value, marking the biggest daily loss ever.
The Euro inched higher against the dollar, on a bounce from yesterday’s low at 1.0970, but remains within near-term 1.1080/1.0970 range for now, with negative technical studies, keeping downside risk in play.
US Oil price bounced on Tuesday, moving away from Monday’s fresh low at $45.82, driven by looming strike in Norway which threatens to cut output in Western Europe’s biggest producer. However, the move is seen as a breather of strong near-term fall, with Brexit impact still weighing on the oil price, keeping the downside vulnerable. The notion is supported by yesterday’s probe below strong technical support at $46.38, sustained break of which would trigger further fall of oil price.
Gold holds steady and trades in extended consolidation above important $1300 support, after peaking at $1358 last Friday. Existing strong safe-haven demand keeps gold supported, as strong post-Brexit uncertainty persists.

Highlights of the day

EU summit and ECB forum are the highlights of the day. The two-day summit of EU Leaders, which starts later today, is expected to weigh on strong market volatility.
European Central Bank forum in Portugal is also due today, with ECB President Mario Draghi due to speak later in the day.

Release of the US Q1 GDP is the highlight of American session, as it is expected to provide more clues of the performance of US economy. Forecast of 1% rise in Q1, in comparison to 0.8% in Q4 of 2015, is optimistic and releases at / above forecasted levels would signal that US economy is picking up, which would be a good signal for the Fed in possible rate hike action.

Important levels
GBPUSD

The pound consolidates after yesterday’s fresh bearish extension that posted new multi-year low, with price action stabilizing above 1.3300 mark. Extended consolidation phase is seen as likely near-term scenario, before prevailing bears resume.
Good resistance lay at 1.3480/1.3500 zone, followed by 1.3550 and 1.3650.
initial support lies at 1.3258, followed by 1.3225 and yesterday’s low at 1.3118. Near-term targets lay at 1.3104 and 1.3000.
EURUSD
The Euro is attempting again at strong 1.1080 / 1.1100 resistance zone, on fresh bullish acceleration on Tuesday’s, after Monday’s trading ended positive.
If the pair makes sustained break above 1.1100 hurdle, stronger correction of 1.1425/1.0909 fall could be anticipated, with near-term focus to shift towards 1.1167 and 1.1228 barriers.
Initial support lies at 1.1000 zone; followed by 1.0969 and key 1.0909 support., Market Analysis