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GBP Faces a Challenging Week of Heavyweight Data; Brexit Vote

GBP Faces a Challenging Week of Heavyweight Data; Brexit Vote

Nick Cawley, Strategist

GBP News and Talking Points

- UK Inflation and wages data key.

- Government seeks to reverse 15 House of Lords amendments to the EU withdrawal bill.

The IG Client Sentiment Report shows that traders are just under 70.4% long GBPUSD – a bearish contrarian signal. However, the combination of current sentiment and recent changes gives us a stronger bearish GBPUSD trading bias.

GBP Faces a Pivotal Week

Sterling’s nascent rally may come pressure thisweek when the Office for National Statistics release their monthly UK wages, employment and inflation data over the next two days. While wages and employment are expected to stay steady, inflation data on Wednesday may well produce a beat to the upside, pushed higher by a strong oil complex. The Bank of England is fully expected to leave monetary policy levers untouched at its next meeting but an uptick in inflation may increase hawkish calls for a 0.25% rate hike at the August MPC meeting.

Live Data Coverage – UK Jobless Claims and Wages Data – 08:15 GMT Tuesday June 12.

Live Data Coverage – UK Consumer Price Inflation Data – 08:15 GMT Wednesday June 13.

GBP Faces a Challenging Week of Heavyweight Data; Brexit Vote

Brexit Amendment Vote is Crucial for PM Theresa May

Sterling traders will also be keeping a close watch on proceedings in the House of Commons where MPs will be voting on 15 House of Lords amendments to the EU Withdrawal Bill. These amendments include requiring the UK to negotiate a customs union with the EU before passing the final bill and giving parliament more power of approval to the final EU Withdrawal Bill, both red lines for UK PM Theresa May.

The British Pound also faces potential headwinds from both the FOMC on Wednesday and the ECB on Thursday. The Fed is fully expected to hike rates by 0.25% for the second time this year while ECB President Mario Draghi may lay out a timetable for ending quantitative easing in the single-bloc.

GBP Starts the Week in Negative Territory

The latest UK industrial and manufacturing output data – both much weaker than expected – has put the British Pound on the backfoot ahead of this week’s crucial events. GBPUSD gave up initial gains and fell back down to 1.33660 post-release and the near-term set-up remains negative with 1.33020 the next level of noted support. The pair are now trading below all three moving averages while the RSI indicator is pointing sharply lower.

GBPUSD Four Hour Price Chart (April 15 – June 11, 2018)

GBP Faces a Challenging Week of Heavyweight Data; Brexit Vote

DailyFX Economic Calendar.

Traders may also be interested in two of our trading guides – Traits of Successful Traders and Top Trading Lessons – while technical analysts may be interested in our latest Elliott Wave Guide.

--- Written by Nick Cawley, Analyst

To contact Nick, email him at nicholas.cawley@ig.com

Follow Nick on Twitter @nickcawley1

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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