British Pound at Key Chart Level Before Still More Brexit Votes
TALKING POINTS – BREXIT, BRITISH POUND, YEN, STOCKS, ISM, PMI, RETAIL SALES
- Yen down, Aussie and NZ Dollars up as Chinese PMI boosts APAC markets
- Risk-on mood may fizzle on soft economic data, another Brexit voting round
- GBP/USD testing pivotal technical support level guiding the 2019 uptrend
Asia Pacific financial markets started the global trading week in an upbeat mood. The anti-risk Japanese Yen traded broadly lower while the sentiment-geared Australian and New Zealand Dollars tracked regional stocks upward. Better-than-expected Chinese PMI data appeared to be catalyst at work.
A spirited rise in bellwether S&P 500 futures hints that more of the same is ahead. That may prove to be misleading as incoming data flow revives global slowdown gears while yet another round of indicative Brexit votes in the UK Parliament signals prolonged uncertainty.
On the data front, Eurozone and UK PMI surveys will be followed by US retail sales statistics and the manufacturing ISM report. A tendency to disappoint on recent macro news-flow suggests analysts’ models are overly rosy, setting the stage for soft results.
Meanwhile in Westminster, MPs will take up another assortment of Brexit options – from endorsing a no-deal divorce to a call for a second national referendum. This is an attempt to find an option able to attract a legislative majority after a third attempt at passing the government’s plan foundered.
At this stage, investors would probably welcome nearly any outcome (besides a “no-deal” approach) that introduces a degree of predictability into the equation. That seems like a tall order in the current environment, warning that another inconclusive outing might send markets scrambling.
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CHART OF THE DAY – GBP/USD AT KEY SUPPORT AHEAD OF BREXIT VOTES
GBP/USD is at a key technical juncture – testing support guiding it higher against the US Dollar since the beginning of the year – ahead of another round of Brexit-shaping voting. A daily close below this barrier, now at 1.3032, may signal resumption of the broader down move set from mid-April 2018. The next layer of immediate support is at 1.2773, the February 14 low. Alternatively, a move back above the minor inflection point at 1.3218 puts the double top in the 1.3350-81 zone back in focus.
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--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.