UK Week Ahead: Brexit Vote and Fed Chair Powell Loom | Webinar
UK Markets, Fed Testimony, Brexit and Sterling:
- Brexit vote this week likely to have limited effect.
- Fed Chair Powell’s testimonies will be parsed for any hints on the path of interest rates.
Sterling (GBP) Waiting for More Clarity
A week with little hard UK data leaves the British Pound even more susceptible to Brexit newsflow and announcements. The meaningful vote discussions, starting in Parliament on Wednesday, may provide some insight into the current Brexit dynamic but with voting on PM May’s deal now pushed back to March 12 (at the latest), expectations of any future direction are low. There is also increased talk from the EU that a Brexit extension may be looked upon kindly, although the EU are unlikely to offer anything unless PM May can give her assurance that an agreement will be able to pass through a vote in Parliament.
The above calendar highlights the lack of any real heavyweight UK data releases with the markets focus expected to be on BoE policy makers testimony at the Treasury Select Committee on Tuesday and three speeches by Fed Chair Jerome Powell on Tuesday, Wednesday and Friday. Not to be outdone, President Trump and North Korean leader Kim Jong-un will meet for a two-day conference in Vietnam starting on Wednesday.
Sterling remains resilient in the short-term although this may be mis-placed if Brexit talks take a turn for the worse. Against the US dollar, the British Pound is pushing towards 1.3100 and has upside potential to move back to 38.2% Fibonacci retracement at 1.3177.
GBPUSD Daily Price Chart (June 2018– February 25, 2019)
IG Retail Sentimentdata shows clients are 52.2% net-long GBPUSD, a bearish contrarian indicator. However, the combination of current sentiment and recent changes suggest GBPUSD prices may move higher.
--- Written by Nick Cawley, Analyst
To contact Nick, email him at firstname.lastname@example.org
Follow Nick on Twitter @nickcawley1
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.