The GBP is Massively Sold Out (Weekly Review)

The most anticipated event of the past week was the European Central Bank Meeting , although no changes were expected  from the ECB. After the meeting, all interest rates remained unchanged, but the absence of a negative reaction to the strengthening of the EUR triggered its purchases, and as a result the EUR/USD tested the resistance at 1.1900. The bulls failed to break through this level, but above 1.1760 the pair's prospects remain constructive.

While the EUR/USD was trying to break higher, the GBP was under the complete control of the bears, as the likelihood of the UK leaving the EU without a trade deal increased significantly due to the British government's intention to pass legislation that would evade part of the Brexit Agreement related to trading with Northern Ireland.

Along with massive sales, the GBP fell against the USD to support of 1.2770, and may well continue to decline in the direction of the 25th figure. Only the resumption of the USD sales can slow down the GBP/USD decline, although currently some fresh market drivers may be required. Such a driver might  be the FOMC meeting this week, and until then large-scale movements in the foreign exchange market can hardly be expected.

Schedule for this week:

Monday, September 14
09:00 GMT - Eurozone. Industrial Production;
15:00 GMT - United Kingdom. UK Parliament Vote on Brexit Deal.

Tuesday, September 15
22:00 GMT - New Zealand. Westpac Consumer Sentiment;
01:30 GMT - Australia. Reserve Bank of Australia Meeting Minutes;
02:00 GMT - PRC. Retail Sales;
06:00 GMT - United Kingdom. ILO Unemployment Rate (3M);
09:00 GMT - Germany. ZEW Economic Sentiment;
13:15 GMT - USA. Industrial Production.

Wednesday, September 16
23:50 GMT - Japan. Trade Balance;
01:00 GMT - Australia. New Home Sales;
06:00 GMT - United Kingdom. Consumer Price Index (CPI);
09:00 GMT - Eurozone. Trade Balance;
12:30 GMT - Canada. Core Consumer Price Index (CPI);
12:30 GMT - Canada. Consumer Price Index (CPI);
12:30 GMT - USA. Retail Sales;
18:00 GMT - USA. Fed Interest Rate Decision;
18:00 GMT - USA. FOMC Statement;
18:30 GMT - USA. Federal Open Market Committee (FOMC) Press Conference.

Thursday, September 17
22:45 GMT - New Zealand. GDP;
01:30 GMT - Australia. Unemployment Rate;
01:30 GMT - Australia. Employment Rate;
03:00 GMT - Japan. Bank of Japan (BOJ) Interest Rate Decision;
03:00 GMT - Japan. Bank of Japan (BOJ) Press Conference and Monetary Policy Report;
06:00 GMT - Japan. Bank of Japan (BOJ) Press Conference ;
11:00 GMT - United Kingdom. Bank of England (BOE) Interest Rate Decision;
11:00 GMT - United Kingdom. Bank of England (BOE) Meeting Minutes;
12:30 GMT - USA. Initial Jobless Claims.

Friday, September 18
23:30 GMT - Japan. National Consumer Price Index (CPI);
06:00 GMT - United Kingdom. Retail Sales;
12:30 GMT - Canada. Retail Sales;
14:00 GMT - USA. Michigan Consumer Sentiment.

Author: Anthony Porter, IAFT Analyst