The British Pound is the Leader in Growth (Weekly Review)

Despite the meetings of the Bank of Japan and the European Central Bank held last week, rather low volatility was noted in the foreign exchange market. The exceptions were again pairs with the British pound, which enjoyed steady demand during the week, against which the GBPUSD broke a number of resistance levels, in particular the psychological level of 1.3000, and tested 1.3216.

Although the prospects for a British exit from the European Union with a deal that suits both parties, remain very vague, speculators continue to buy the pound. The next wave of its purchases was triggered by the message that the North Irish Democratic Unionist Party, under certain conditions, is ready to support Theresa May’s new “B” plan, but in the absence of real progress in London’s negotiations with Brussels, the pound will remain vulnerable.

The result of the meetings of the Bank of Japan and the ECB, i.e. keeping interest rates unchanged, was predictable, and it had little or no effect on the dynamics of the yen and the euro. Movements in pairs with the EUR, namely its decline, were caused by "soft" comments by Mario Draghi, that surely did not give the slightest reason to expect the Central Bank to tighten monetary policy in the foreseeable future, but along with the general weakness of the USD, the EUR managed to close the week above the 14th figure. Thus, it got a chance to try again to get through to the 15th figure, but at this stage the risks of its decline still remain.

Schedule for this week:

Monday, January 28
13:30 GMT – Chicago Fed National Activity Index (Dec);
14:00 GMT – Eurozone. European Central Bank President Draghi Speaks;
14:30 GMT – United Kingdom. Bank of England Governor Mark Carney Speaks.

Tuesday, January 29
22:45 GMT – New Zealand. Trade Balance;
22:45 GMT - New Zealand. Import/Export;
14:00 GMT - USA. S&P/CaseShiller House Price Index;
15:00 GMT - USA. Consumer Confidence;
19:00 GMT - United Kingdom. UK Parliament vote on Brexit deal.

Wednesday, January 30
23:50 GMT – Japan. Retail Sales;
00:30 GMT - Australia. Consumer Price Index (CPI);
00:30 GMT - Australia. RBA Consumer Price Index (CPI) Index Number;
07:00 GMT - Germany. GfK German Consumer Climate;
09:30 GMT – United Kingdom. Mortgage Approvals;
10:00 GMT - Eurozone. Business Climate indicator;
13:00 GMT - Germany. Harmonised Index of Consumer Prices (HICP);
13:00 GMT - Germany. Consumer Price Index (CPI);
13:15 GMT - USA. ADP Nonfarm Employment Change;
13:30 GMT - USA. Core Personal Consumption Expenditure (PCE) Prices (QoQ) (Q4);
13:30 GMT - USA. GDP (Q4);
13:30 GMT - USA. GDP Price Index (Q4);
19:00 GMT - USA. Fed Interest Rate Decision;
19:00 GMT - USA. Federal Open Market Committee (FOMC) Statement.

Thursday, January 31
01:00 GMT - PRC. NBS Manufacturing Purchasing Managers Index (PMI);
01:00 GMT - PRC. Services Purchasing Managers Index (PMI);
03:30 GMT - Australia. Reserve Bank of Australia Interest Rate Decision;
03:30 GMT - Australia. Reserve Bank of Australia Statement;
07:00 GMT - Germany. Retail Sales;
08:55 GMT - Germany. Unemployment Rate;
08:55 GMT - Germany. Unemployment Change;
10:00 GMT - Eurozone. Unemployment Rate;
10:00 GMT - Eurozone. GDP;
13:30 GMT - USA. Initial Jobless Claims;
13:30 GMT - USA. Personal Income/Spending;
13:30 GMT - USA. Core Personal Consumption Expenditure (PCE) Price Index;
13:30 GMT - Canada. GDP;
14:45 GMT - USA. Chicago Purchasing Managers Index (PMI).

Friday, February 1 
21:30 GMT - Australia. AIG Manufacturing Index;
23:30 GMT - Japan. Unemployment Rate;
23:30 GMT - Japan. Jobs/applications ratio;
01:45 GMT - PRC. Caixin Manufacturing Purchasing Managers Index (PMI);
08:15 GMT – Switzerland. Consumer Price Index (CPI);
08:55 GMT - Germany. Markit Manufacturing Purchasing Managers Index (PMI);
09:00 GMT - Eurozone. Markit Manufacturing Purchasing Managers Index (PMI);
09:30 GMT – United Kingdom. Markit Manufacturing Purchasing Managers Index (PMI);
13:30 GMT - USA. Nonfarm Payrolls;
13:30 GMT - USA. Unemployment Rate;
13:30 GMT - USA. Average Hourly Earnings;
14:45 GMT - USA. Markit Manufacturing Purchasing Managers Index (PMI);
15:00 GMT - USA. ISM Manufacturing Purchasing Managers Index (PMI);
15:00 GMT - USA. ISM Manufacturing Prices.

Author: Anthony Porter, IAFT Analyst