GBPUSD appreciate after PM May could make significant progress towards securing parliamentary backing for her Brexit deal this week. Today, she will be meeting with Juncker in Brussels in the hope of reaching an alternative solution to the NI backstop. Major support at 1.3000 and resistance at the 1.3217.
The next important date for the Brexit is February 27, 2019, where Theresa May will present a plan that the parliament must vote. Furthermore, Secretary Barclay had a positive meeting in Brussels concerning the NI backstop with the European Commission President saying that no one in the EU would oppose British demand for an extension.
The U.S. dollar appreciated after the news that an agreement between the Democrats and the Republicans was reached. This outcome keeps the government shutdown on hold. Trump said that he does not expect another shutdown and this announcement is very positive for the dollar. He further stated that China is showing tremendous respect as the talks progress.
The sterling appreciated following the British government's pressure to the MPs for accepting PM May's deal otherwise a long delay in implementation might occur. The FX Market considers the scenario of positive news for the sterling. Furthermore, BOE Carney warned on the risks of no-deal Brexit and the ‘’economic shock’’ that could take place.
EURCHF remains weak upon external factors but mainly due to risk aversion. The SNB’s monetary policy shall resume within the same frame while the negative interest rate of -0.75% will be unchanged for the next quarters. On the other hand, the SNB stated that if necessary, action will be taken to cease CHF's appreciation.
Last week the EURUSD sold off until 1.1318 resuming though above the uptrend level at 1.1315. There is probability that the market holds and recovers at 1.1580 (Jan high) in the condition of a break above the 1.1620 zone. In contrast, in the event where the price drops the next support is at the 1.1270 November and December lows. Alternatively, in the scenario of a break below the 1.1270 the next level will be the 1.1180 (61.8% Fib).
The sterling trades within a narrow range ahead of BOE’s meeting this afternoon. The pressures on the British currency intensify with less than two months to go until the formal exit from the EU. Today the BOE is expected to hold a steady and ‘’ wait and see’’ policy.
The sterling resumes under pressure after the Manufacturing PMI dropped unexpectedly to 52.8, below the 53.5 threshold, upon the Brexit uncertainty. Next week the BOE’s meeting will take place with the market forecast on the Central Bank's monetary policy looking neutral.
This morning the AUDUSD remained weak upon fragile Chinese data. China is Australia’s largest partner making great sense why the Australian economy is under pressure. Next week is the RBA's meeting with the market forecasts looking more dovish on the Central Bank.
The GBPUSD appreciated against the U.S. dollar last week, recovering the drop of the previous eleven weeks, following reports that the DUP party could support PM May should the North Irish backstop matter is resolved. Queen Elisabeth called the British to unite and seek for common ground foreseeing the big picture.
The ECB left monetary policy unchanged. President Draghi was dovish but on the other hand expressing optimism. Draghi’s concern was on China's slowdown, the Brexit, the Trade war issue, and lower core inflation. Alternatively, Draghi was optimistic about the economic data such as the Energy prices having helped consumers and the labor market with almost zero probability for recession.
The GBPUSD appreciated above 1.2900 upon strong UK labour data. The rate of unemployment fell at 4.0%, the lowest level in 40 years. The sterling reacted positively after PM May promised to be more open with the parliament on negotiations unlocking the chance for a softer exit.