By Lukman Otunuga
Growth in the largest economy in Africa slowed to 2.01% during the first quarter of 2019, thanks to external risks and contraction in the Oil sector.
Although the non-Oil sector grew by 2.47%, the Oil sector, which remains the country’s biggest foreign exchange earner, shrank by 2.40%. While Nigeria remains on a quest to break away from the chains of Oil reliance, the nation remains exposed to external shocks and this was reflected in the latest GDP figures. Will the deceleration in growth momentum pressure the Central Bank of Nigeria to cut interest rates in an effort to jumpstart the economy? This is a question on the minds of many investors.
Sterling struggles to nurse wounds as political risk continues to bite
The return of domestic political turmoil in the United Kingdom has led to a flurry of selling momentum for the British Pound, which fell over 300 pips during the previous trading week.
The selling momentum returned once again in the early hours ofMonday morning and the news flow circulating around UK Prime Minister Theresa May needing to state her leaving date, coupled with Labour leader Jeremy Corbyn stating that Brexit discussions have broken down makes it doubtful for buyers to be tempted back into the GBPUSD.
Taking a look at the technical picture, the GBPUSD remains firmly bearish on both the daily and weekly charts. There have been consistently lower lows and lower highs while the MACD has crossed to the downside. The solid weekly close below 1.2820 has opened the doors towards 1.2700 and 1.2620 in the near term.
Commodity spotlight – Gold
The past few days have certainly not been kind to Gold and this continues to be reflected in the bearish price action.
Signals over the direction of US-China trade talks have caused risk sentiment to swing back and forth, ultimately impacting the appetite for Gold. While Gold bulls are clearly losing the battle as prices trade towards $1274, the war still rages on.
The sentiment pendulum could easily swing in favour of bulls this week, if trade tensions intensify and concerns over slowing global growth accelerate the flight to safety. With Gold still supported by core themes in the form of a cautious Federal Reserve and speculation over a potential US rate cut in 2019, the precious metal remains shielded by downside shocks.
Looking at the technical picture, sustained weakness below $1280 is seen opening a path towards $1268 in the short-to-medium term.