It has been a weekend of mayhem in Turkey as a failed attempt at a coup d’état rocked the country. Prime Minister Erdogan with 52% of the public’s support has managed to restore law and order after several thousand military, police and government officials were arrested on charges of treason. Hundreds of people were killed and scores injured after a failed insurgency purportedly led by an exiled reformist Islamist leader. Order has been restored to Turkey, but the political balance remains precariously poised.

UK leadership calms global anxiety

In other news, Britain’s new Prime Minister, Theresa May is entering her second week as leader of the United Kingdom. She faces myriad challenges, including stabilisation of UK financial markets, the GBP and the political arena. Nonetheless, markets have reacted positively to date as Brexit fears have subsided to a degree. The GBP has gained ground, after clawing its way up from a 31-year low recently and it is now trading at 1.32 to the greenback after consolidating at the end of the week. Currency analysts are anticipating a resistance level around 1.3476 for the GBP/USD pair with a reference low of 1.3103. For the year-to-date, the currency pair has pulled back from 14% declines and is now just 9.37% down, after the shock drop that took place on June 23, 2016 when it was trading at 1.4789 to the greenback.

US economy remains strong in the face of global challenges

The US economy has provided a bulwark of support to the global economy during this time. US GDP growth quarter on quarter on an annualised basis has been positive ever since the end of 2014, with rising house prices and a steadily strengthening jobs market. Annualised Q1 GDP growth has been reported at 0.5%. The size of the US economy in trillions of dollars at constant prices continues to grow, which is a positive indicator for global markets.

US GDP per person remains strong and the US is one of the world’s richest countries measured across most metrics. The current Q3 nowcast is 3.08%, indicating the GDP growth projection is strong. This has been a highly bullish period for the US economy, buoyed to a large degree by the 287,000 non-farm payrolls jobs figure for June 2016. Predicted US economic growth for the current year (annual percentage change) is well above 3%. In terms of the US’s performance against other economies in 2016, it leads the UK and the Eurozone by a large degree.

It is against this backdrop that we examine the potential trading opportunities across all asset categories.

1- GBP/USD currency pair

The GBP/USD pair is trading at 1.3180, down 1.1177% or $0.0149. The 52-week trading range is $1.28 on the low end and $1.58 on the high end. For the year-to-date, the pair has depreciated by 9.37%, led largely by market anxiety about the implications of a Brexit. The pair has consolidated since 13 July in a tight trading range between 1.3278 and 1.3120, bouncing off the 31-year lows between 1.2916 and 1.2800.

As it stands, the end of week consolidation (Friday, 15 July 2016) was largely brought about by stability in UK political circles and a calming of market jitters about long-term Brexit effects. Currency analysts anticipate a support level through 21 July of 1.3103 and a resistance level of 1.3476 for this pair. Traders will be carefully scrutinising the pair for any movements beyond this tight trading range. If prices don’t breakout, we may see a continued consolidation in this range in terms of resistance and support levels.

2 – JPMorgan Chase & Company (NYSE: JPM) report strong earnings

JPMorgan Chase & Company (NYSE: JPM) has enjoyed bullish performance over the past 5 days. The stock is up 3.19% since Monday, 11 July, with further gains expected. It is currently trading at $64.18 per share, up 0.09% or $0.06. On Friday, 15 July, the stock shed 0.50%, but it remains a positive performer overall. For the year-to-date JP Morgan Chase & company (NYSE: JPM) has only given up 2.80%, after opening at $66.03 in 2016. Big banks were given a boost by recent earnings of $1.55 per share for JPM, with consensus forecasts of $1.43 per share.

The bank has managed to buck Brexit fears and even reported stronger than expected revenues by a long margin. This is particularly important in the broader scheme of things, given that banks in the US were anticipating at least 2 additional rate hikes in 2016. That banks have been able to generate profits by cutting costs and remain competitive in a recessionary global economy is laudable. JP Morgan Chase & company enjoyed a solid quarter, with low expectations being beaten across the board.

3 – FTSE 100 index rallies on upbeat sentiment

Britain’s premier index, the FTSE 100 index is currently trading at 6669.24, up 0.22% or 14.77 points. By the end of the trading week on Friday, 15 July, the UK premier index had managed to snap 3 days of successive losses to move into the black. On Monday, 11 July the index rallied 1.40% or 92.22 points, followed by a decline of 0.03% or 2.17 points on Tuesday, 12 July, a further decline of 0.15% or 10.29 points on Wednesday, 13 July and declines of 0.24% or 15.93 points on Thursday, 14 July.

Over the past 1 month, the FTSE 100 index has outperformed expectations. Between 20 June and 27 June it gained 1.95% or 117.60 points, between 27 June and 4 July the FTSE 100 index rallied by 7.15% or 439.14 points, and between 4 July and 11 July the index gained 0.19% or 12.81 points. Overall, the trend for the FTSE 100 index is bullish and this is likely to continue as market anxiety abates and UK politics coalesces around Prime Minister Theresa May.

4 – Gold retreats as risk-on approach adopted with equities markets

As the world’s #1 safe-haven asset, gold has a particularly important role to fill in the financial markets. It is the go-to asset during times of geopolitical uncertainty (such as a Brexit, a military coup in Turkey, or a commodity-price crunch) and extreme volatility in financial markets. We have seen the gold price reaching 2-year highs as it climbed close to $1400 per ounce. Currently, the gold price is $1337.39 per ounce, and still at multi-your eyes. However, as anxiety about a Brexit has subsided, we have seen the gold price retreating somewhat.

This is due to a strong non-farm payrolls jobs report for June 2016 in the US (287,000 new jobs created), new political leadership in the United Kingdom and a resurgence of the GBP/USD currency pair. We can expect gold to continue retreating as long as the sentiment in the global economy improves. However, the low yields on equities and the high volatility there are will always allow for ample space in financial portfolios for gold bullion, ETFs, coins or stocks.