The UK is currently getting ready for the departure from the EU this month. Brexit will definitely deliver a blow to the UK economy and the national currency in particular. So, USD may regain impulsive momentum.
The Bank of England has been preparing for the no-deal BREXIT crisis and warned some lenders to hold enough liquid assets to cope with stress of 100 days. Ahead of March 29, it is still quite unclear whether there would be a deal, delay or no-deal BREXIT. As the biggest impact of BREXIT is going to be on the financial industry, the BOE is currently trying to prepare them with proper guidance along the way ahead of the big impact. Moreover, UK Prime Minister Theresa May is still trying to save her deal by talking to European Commission President Jean-Claude Juncker. So, the talks to be held today are goingto impact on GBP gains depending on the outcome.
Today the UK GDP report is going to be published which is expected to increase to 0.2% from the previous value of -0.4% and Manufacturing Production is also expected to increase to 0.2% from the previous value of 0.7%. Additionally, Construction Output is expected to increase to 0.9% from the previous value of -2.8% and Industrial Production is also expected to increase to 0.2% from the previous value of -0.5%.
On the USD side, recently FED Chair Jerome Powell stated that the US does not consider changing its funds interest rate soon as the global economy slowdown is affecting the economy. According to Powell, the rates are currently quite appropriate to sustain economic momentum. Recently US Retail Sales report was published with an increase to 0.2% from the previous value of -1.6% which was expected to be at 0.0% and Core Retail Sales increased to 0.9% from the previous value of -2.1% which was expected to be at 0.4%. Moreover, today US CPI report is going to be published which is expected to increase to 0.2% from the previous value of 0.0% and Core CPI is expected to be unchanged at 0.2%.
Meanwhile, GBP is quite optimistic with the upcoming high impact economic reports whereas USD being positive with the recently published Retail Sales did not quite help the US currency to sustain its gains it had earlier. This indicates that GBP is far stronger than USD at the current market situation. Though certain correction may be observed along the way, ultimately GBP is expected to lose momentum due to looming BREXIT situation and afterwards.
Now let us look at the technical view. The price is currently trading above 1.3100 area after the impulsive break with a daily close. Currently the price is expected to retrace back to the 1.31 area before it manages to push higher towards 1.3350 resistance area in the coming days. As the price reside above 1.3100 area, the impulsive bullish pressure is expected to build up more.
The material has been provided by InstaForex Company - www.instaforex.com