British Pound Nervousness Remains (Weekly Review)

Last week a number of votes were passed in the British Parliament where lawmakers voted against the UK leaving the European Union without a deal and for postponing its deadlines. In general, these votes do not guarantee both the “soft” Brexit and its postponement, but participants in the foreign exchange market, nevertheless, bought the British pound on declines, while its growth on the news was used for sales.

This week may also be marked by increased volatility in pairs with the GBP, since British Prime Minister Theresa May again has to pass a vote on a deal with the European Union. In case of another failure, the exit from the EU can really be delayed, although London will have to convince Brussels to agree with the postponement. Although the probability of this is quite high, it is not a fact that the pound will manage to develop steady growth, since in the face of continuing uncertainty around Brexit, speculators may not take the increased risks associated with buying a pound.

The euro, in its turn, will remain vulnerable. Differential of interest rates and sluggish growth rates in the Eurozone economy still do not justify its purchases. The only thing the EUR/USD bulls can hope for is the US Federal Reserve's forecast of decrease of economic growth and interest rates, which may cause a negative market reaction for the USD. Nevertheless, this is unlikely to be the basis for the development of the bull trend in the EUR/USD, and the growth of the pair can be used for its sales.

Schedule for this week:

Monday, March 18
10:00 GMT - Eurozone. Trade Balance;
14:00 GMT - USA. NAHB Housing Market Index (Mar);
20:00 GMT – New Zealand. Westpac Consumer Sentiment (Q1).

Tuesday, March 19
22:00 GMT – Australia. Reserve Bank of Australia Assistant Governor Kent Speaks;
00:30 GMT – Australia. RBA Meeting Minutes;
09:30 GMT – United Kingdom. Average Earnings ex Bonus (3 MoM) (Jan);
09:30 GMT - United Kingdom. ILO Unemployment Rate (3M) (Jan);
10:00 GMT - Germany. ZEW Economic Sentiment;
14:00 GMT - USA. Factory Orders (MoM) (Jan).

Wednesday, March 20
23:50 GMT - Japan. BoJ Monetary Policy Meeting Minutes;
07:00 GMT - Germany. Producer Price Index (PPI);
09:30 GMT - United Kingdom. Consumer Price Index (CPI);
09:30 GMT - United Kingdom. Core Consumer Price Index (CPI);
18:00 GMT - USA. Fed Interest Rate Decision;
18:00 GMT - USA. Federal Open Market Committee (FOMC) Statement;
18:00 GMT - USA. Federal Open Market Committee (FOMC) Economic Projections;
18:30 GMT - USA. Federal Open Market Committee (FOMC) Press Conference;
19:00 GMT - United Kingdom. British Parliament Brexit deal vote.

Thursday, March 21
21:45 GMT - New Zealand. GDP (QoQ) (Q4);
00:30 GMT - Australia. Unemployment Rate;
00:30 GMT - Australia. Employment Rate;
08:30 GMT - Switzerland. Swiss National Bank (SNB) Interest Rate Decision;
08:30 GMT - Switzerland. Swiss National Bank (SNB) Monetary Policy Statement;
09:30 GMT - United Kingdom. Retail Sales;
12:00 GMT - United Kingdom. Bank of England Interest Rate Decision;
12:00 GMT - United Kingdom. Bank of England Statement;
12:30 GMT - USA. Initial Jobless Claims;
12:30 GMT - USA. Philadelphia Fed Manufacturing Index (Mar).

Friday, March 22
23:30 GMT - Japan. National Consumer Price Index (CPI);
08:30 GMT – Germany. Markit Manufacturing Purchasing Managers Index (PMI);
09:00 GMT – Eurozone. Markit Composite Manufacturing Purchasing Managers Index (PMI);
09:30 GMT - United Kingdom. Public Sector Net Borrowing;
12:30 GMT - Canada. Retail Sales (MoM) (Jan);
12:30 GMT - Canada. Consumer Price Index (CPI);
12:30 GMT - Canada. Core Consumer Price Index (CPI);
13:45 GMT - USA. Markit Manufacturing Purchasing Managers Index (PMI);
08:00 GMT - USA. Federal Budget Balance.

Author: Anthony Porter, IAFT Analyst