The Pound Maintains a Positive Tendency Despite No Deal with the EU (Weekly Review)

For the last two weeks attention of financial market participants has been focused on ongoing US trade negotiations with the PRC and attempts by the British Prime Minister Theresa May to reach a deal with Brussels that would ensure a “soft” exit of the country from the European Union. These events are still surrounded by a halo of uncertainty, but the comments of politicians continue to inspire some optimism, against which the Japanese yen, used as a "safe haven" asset, remains under pressure, and the pound still makes attempts to develop an upward trend.

Thus, hopes for ending of the trade war between the United States and China, along with positive corporate reporting, contributed to maintaining positive dynamics in the stock markets, and under these conditions, the USD tried to break through to the psychological mark of 111.00 paired with the JPY. In general, volatility, especially in the USD/JPY, was low, and the dollar did not succeed in achieving any visible success. In technical terms, this increases the likelihood of profit taking on long positions, and 110.00 is threatened to be tested and broken through. 

Despite the lack of any progress in London’s negotiations with Brussels on Brexit, the British pound is trading mostly positive. The withdrawal of several MPs from the Conservative Party, who are determined to eliminate the possibility of the UK leaving the EU without a deal, as well as speculations about a possible postponement of Brexit, fueled interest in buying the GBP, but its position is still vulnerable, and even if May succeeds in negotiations with the EU and / or the upcoming voting in the parliament, its growth may be limited due to rather weak macroeconomic statistics, so the bulls should continue to be extremely cautious.

Schedule for this week:

Monday, February 25
13:30 GMT - USA. Chicago Fed National Activity (Jan)

Tuesday, February 26
07:00 GMT – Germany.  GfK German Consumer Climate (Mar);
10:00 GMT – United Kingdom. Inflation Report Hearings;
12:30 GMT - United Kingdom. U.K. Prime Minister May Speaks;
13:30 GMT - USA. Building Permits (MoM) (Dec);
13:30 GMT - USA. Housing Starts (MoM) (Dec);
14:00 GMT - USA. Federal Reserve Chair Jerome Powell Testifies;
14:30 GMT - Eurozone. ECB's Mersch Speaks;
15:00 GMT - USA. Consumer Confidence.

Wednesday, February 27
21:45 GMT – New Zealand. Trade Balance;
21:45 GMT - New Zealand. Import/Export;
08:30 GMT - Eurozone. ECB's Coeure Speaks;
13:30 GMT - USA. Goods Orders Non Defense Ex Air (Jan);
13:30 GMT - USA. Durable Goods Orders;
13:30 GMT - Canada. Consumer Price Index (CPI);
13:30 GMT - Canada. BoC Core Consumer Price Index (CPI); ;
14:00 GMT - USA. Fed Chair Powell Testifies;
15:00 GMT - USA. Factory Orders (MoM) (Dec);
18:00 GMT - United Kingdom. UK Parliament Votes on Brexit Deal.

Thursday, February 28
23:50 GMT - Japan. Foreign Investments in Japanese Stocks;
23:50 GMT - Japan. Foreign Bond Buying;
23:50 GMT - Japan. Industrial Production;
00:30 GMT – Australia. New Home Sales;
01:00 GMT – PRC. Services Purchasing Managers Index (PMI);
01:00 GMT - PRC. NBS Manufacturing Purchasing Managers Index (PMI);
06:45 GMT – Switzerland. GDP;
13:00 GMT - Germany. Harmonised Index of Consumer Prices (HICP);
13:15 GMT - USA. Jerome Powell Speaks;
13:30 GMT - USA. Initial Jobless Claims;
13:30 GMT - USA. GDP annual (Q4);
14:45 GMT - USA. Chicago Purchasing Managers Index (PMI).

Friday, March 1
21:30 GMT - Australia. AIG Manufacturing Index;
21:45 GMT - New Zealand.  Building Consents;
23:30 GMT - Japan. Unemployment Rate;
23:30 GMT - Japan. Unemployment Rate;
23:30 GMT - Japan. Tokyo Consumer Price Index (CPI);
01:45 GMT - PRC. Caixin Manufacturing Purchasing Managers Index (PMI);
08:55 GMT – Germany. Unemployment Rate;
08:55 GMT - Germany. Unemployment Change;
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);
10:00 GMT - Eurozone. Core Consumer Price Index (CPI) (YoY) (Feb);
10:00 GMT - Eurozone. Consumer Price Index (CPI);
10:00 GMT – Eurozone. Unemployment Rate;
13:30 GMT - USA. Core PCE Price Index;
13:30 GMT - USA. Personal Income/Spending;
13:30 GMT - Canada. GDP;
13:30 GMT - Canada. GDP Annual;
14:30 GMT - Canada. Manufacturing Purchasing Managers Index (PMI);
15:00 GMT – USA. ISM Manufacturing Purchasing Managers Index (PMI);
15:00 GMT - USA. ISM Prices Paid Index;
15:00 GMT - USA. Michigan Consumer Sentiment. 

Author: Anthony Porter, IAFT Analyst