Forex Weekly GBP/USD

Forex Weekly GBP/USD

3 abril 2017, 04:07
Anderson Braga


Data Review

  • Net Consumer Credit 1.4b vs. 1.3b Expected
  • Net Lending Sec. on Dwellings 3.5b vs. 2.5b Expected
  • Mortgage Approvals 68.3k vs. 69.1k Expected
  • Article 50 Enacted
  • GfK Consumer Confidence Survey -6 vs. -7 Expected
  • Current Account Balance -12.1b vs. -16.0b Expected
  • GDP 0.7% vs. 0.7% Expected
  • Index of Services -0.1% vs. 0.2% Expected

Data Preview

  • PMI Manufacturing- Potential for upside surprise given stronger CBI industrial trends survey
  • Services and Composite PMI- Will update after PMI services. GfK consumer sentiment index steady
  • Industrial and Manufacturing Production and Trade Balance- Will have to see how PMI manufacturing index fares

Key Levels - GBP/USD

  • Support 1.2400
  • Resistance 1.2600

The British government invoked Article 50 of the Lisbon Treaty, the E.U. responded and sterling did not experience an ugly demise. Instead, U.K. financial markets acted quite orderly with GBP/USD ending the week within 50 pips of where it started. There were intraweek swings but given the historical significance of this week’s developments, the swings could have been far greater. We knew this day would come but its inevitability does not minimize its significance, the U.K. is leaving the European Union and investors, businesses and individuals are bracing for the fall-out. So far, the pain has been minimal with GBP/USD recovering part of its recent losses. Friday morning, the EU submitted its response to the Article 50 and they gave the U.K. 1 year after they leave the Union to work on a trade deal and only if they settle their financial commitments. It’s not the worst case scenario because they are willing to talk trade but it’s not the best case scenario because Britain needs to first "show sufficient progress" on their settlement of the Brexit bill, a payment they have previously refused to pay. Scotland also officially requested a referendum. While we believe that all of these developments are negative for GBP, the currency is trading well and we have to respect the price action as a result. Sterling traders are taking the Article 50 trigger, EU response and Scotland’s call for a referendum in stride and if that continues GBP/USD could squeeze up to 1.26. U.K. fundamentals will return to focus this week with the March PMIs scheduled for release. The recent hawkishness dissent in the Bank of England leads many to believe that the economy continued to improve last month.

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