ForexTime Limited (FXTM), a global online foreign exchange broker, has said that global financial markets might experience extreme levels of volatility in the coming weeks, as the catalytic combination of sporadic oil prices, on-going Brexit anxieties and anticipation ahead of the US presidential election leave investors on edge.
Research analyst at FXTM, Mr. Lukman Otunuga, in a currency market analysis tagged: “Market Volatility on a Comeback,” said stock markets recently received a slight welcome boost with most major arena’s swinging back into gains, as talks of Hillary Clinton winning the first US presidential debate renewed risk appetite. “Although Asian equities managed to charge into green territory post-debate, gains were swiftly relinquished in Europe amid the heavy losses in banks and carmakers.
Wall Street could be exposed to steeper losses if the bearish domino effect from Europe provides a solid foundation for sellers to attack. It is becoming increasingly clear that the short term gains observed in stocks are becoming unsustainable with the ingredients of bear market potentially leaving stock markets exposed to heavy losses in the future,” Otunuga said. He noted that concerns over the global economy remained elevated while the mounting uncertainty ahead of the US presidential election could repel investors from riskier assets.
“ Central bank caution remains a recurrent theme, which has a negative grip on global sentiment and oil prices volatility continues to sour risk appetite. The ingredients for a bear trend ripen by the day and it could take an unexpected catalyst to trigger a steep stock market selloff.
“Sterling bears were unleashed last week with the GBPUSD approaching post-Brexit lows, as the persistent Brexit anxieties haunted investor attraction towards the currency. It is becoming quite clear that the Brexit has a firm grip on the Sterling with investors slowly digesting the unfavourable impacts it may have on the UK economy in the longer term.
Sterling may be exposed to further losses with uncertainty mounting over when article 50 will be triggered and warnings growing over the UK being unable to have a trade deal with the European Union in two years.
“ From a technical standpoint, the GBPUSD is under pressure on the daily timeframe, as prices are trading below the daily 20 SMA while the MACD has crossed to the downside. A breakdown below 1.2950 could encourage a steeper decline towards 1.2850. “The withering expecta-