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US AM Digest: British Pound, Euro Start Week on Tops Thanks to Brexit, ECB

US AM Digest: British Pound, Euro Start Week on Tops Thanks to Brexit, ECB

Research, Research Team

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The US Dollar has started off the week on softer footing but for no reason of its own doing: the British Pound has rallied on the back of headlines that a two-year Brexit transition deal has been agreed upon by the EU and the UK; and the Euro is up on the back of headlines that the ECB is reconsidering their easing path. The British Pound should stay in the headlines over the next few days, with the February UK CPI report out tomorrow and the Bank of England policy meeting on Thursday. While the BOE isn’t going to raise rates, it’s expected that the Monetary Policy Committee will signal a greater willingness to raise rates when the next Quarterly Inflation Report is due out in May. Elsewhere, trade tensions remain high, leaving the commodity currencies on edge on approach to Friday’s arbitrary deadline set by the US Trump administration.

DailyFX Economic Calendar: Monday, March 19, 2018 – North American Releases

US AM Digest: British Pound, Euro Start Week on Tops Thanks to Brexit, ECB

Monday is easily the lightest day on the economic calendar this week, with no ‘medium’ or ‘high’ importance data releases on the North American docket today. The data flow should intensify as the week marches forward, with the March FOMC meeting on Wednesday and the February Canadian CPI report on Friday.

DailyFX Webinar Calendar: Monday, March 19, 2018

US AM Digest: British Pound, Euro Start Week on Tops Thanks to Brexit, ECB

IG Client Sentiment Index Chart of the Day: GBPUSD

US AM Digest: British Pound, Euro Start Week on Tops Thanks to Brexit, ECB

GBPUSD: Retail trader data shows 47.0% of traders are net-long with the ratio of traders short to long at 1.13 to 1. The number of traders net-long is 8.4% higher than yesterday and 4.2% lower from last week, while the number of traders net-short is 3.7% higher than yesterday and 13.5% higher from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests GBPUSD prices may continue to rise. Positioning is less net-short than yesterday but more net-short from last week. The combination of current sentiment and recent changes gives us a further mixed GBPUSD trading bias.

Learn more about the IG Client Sentiment Index on the DailyFX Sentiment page

Five Things Traders are Reading

  1. “UK Market Webinar: A Packed Week of Important Data and Releases” by Nick Cawley, Analyst
  2. “GBP Well Placed For Further Gains on Brexit and Bank of England” by Martin Essex, MSTA, Analyst and Editor
  3. “Key Reversals Put Brakes on Declines in Bitcoin, Ethereum & Litecoin” by Paul Robinson, Market Analyst
  4. “Ripple (XRP) Bounce Back Should be Treated with Caution” by Nick Cawley, Analyst
  5. “Weekly CoT: Euro Large Specs Very Bullish, Yen Traders Curb Shorts Again” by Paul Robinson, Market Analyst

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