GBP/USD is trending lower on Tuesday for a 4th straight session amid dovish BoE expectations, hard Brexit fears and continued coronavirus fears.
The second half of this weeks sees the BoE monetary policy announcement and the date that the UK leaves the EU.
Hard Brexit
Following Boris Johnson's Brexit bill's rapid passing through UK Parliament, the EU Parliament will vote on the bill tomorrow, no surprises are expected. The UK will leave the EU on Friday 31st January. The focus will then shift firmly onto difficult trade talks between the UK and EU. The two sides will have until the end of the year to hammer out a trade deal. Failure to reach an agreement means the UK will endure a hard, no deal Brexit.
The pound will continue to act as a fear gauge of a no deal Brexit. Today the pound is falling in part owing to comments by Chief EU negotiator Michel Barnier that a disorderly Brexit is still an option.
Dovish BoE?
Data has been mixed. Retail sales earlier in the month disappointed, whilst more recently labour market data and PMI's surprised to the upside, making traders scale back their expectations of a rate cut. The market is pricing in a 50 / 50 probability of rates being slashed on Thursday.
With a 50% chance of a rate cut from BoE coupled with fears of a no deal Brexit the pound is under pressure.
Safe Haven Dollar Looks To Data
The safe haven dollar has found support amid growing concerns over the spread of China's deadly coronavirus and the potential economic impact of the outbreak on global growth and trade.
With no UK macroeconomic data due today, attention will move to US durable goods orders later today. Expectations are for a rebound in durable goods, increasing 0.9% in December, up from -2.1% decline in November.
Levels to watch:
A move through the 50 sma this morning has triggered further selling. GBP/USD is testing trend line support. A meaningful break through here and through immediate support at the kept $1.30 psychological level could open the door to support at $1.2950 prior to December low of $1.29.
On the upside a move above $1.3050 could negate the current bearish bias, before an attempt on $1.3150, $1.3170 and $1.3212 (Jan 6th high).
CFD and forex trading are leveraged products and can result in losses that exceed your deposits. They may not be suitable for everyone. Ensure you fully understand the risks. From time to time, City Index Limited’s (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material. As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed
Recommended Content
Editors’ Picks
AUD/USD: Extra gains need to clear 0.6400
AUD/USD rose for the third day in a row, approaching the key 0.6400 resistance on the back of the acute pullback in the US Dollar amid mounting recession concerns and global trade war fear.
EUR/USD: Powell and the NFP will put the rally to the test
EUR/USD gathered extra steam and advanced to multi-month peaks near 1.1150, although the move fizzled out somewhat as the NA session drew to a close on Thursday.
Gold looks offered near $3,100
Prices of Gold remain on the defensive on Thursday, hovering around the $3,100 region per troy ounce and retreating from earlier all-time peaks near the $3,170 level, all against the backdrop of investors' assessment of "Liberation Day".
Interoperability protocol hyperlane reveals airdrop details
The team behind interoperability protocol Hyperlane shared their upcoming token airdrop plans happening at the end of the month. The airdrop will occur on April 22, and users can check their eligibility to receive $HYPER tokens via a portal provided by the Hyperlane Foundation by April 13, the team shared in a press release with CoinDesk.
Trump’s “Liberation Day” tariffs on the way
United States (US) President Donald Trump’s self-styled “Liberation Day” has finally arrived. After four straight failures to kick off Donald Trump’s “day one” tariffs that were supposed to be implemented when President Trump assumed office 72 days ago, Trump’s team is slated to finally unveil a sweeping, lopsided package of “reciprocal” tariffs.
The Best brokers to trade EUR/USD
SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.