Pair closed last week’s trading session marginally lower as conflicting data from both sides, is keeping the pair consolidating around the same levels for a 4th week in a row. Higher than expected inflation number in the US pushed the pair lower but not for long as the FED maintaining its dovish stance for now. In the EU reopening of businesses and vaccination program are on a better-than-expected rate and this is keeping Euro stronger despite ECB’s dovish stance.
As for this week, traders will be focusing on the FOMC minutes and the economic calendar releases, mainly on 2 major figures, the US and EU Inflation numbers and employment rates. It’s now obvious that the better the numbers from any of the two continents the faster the economic policy normalization will take place. Many Fed and ECB officials are due to speak out this week and must be carefully monitored for gathering information about the central bank’s next move.
On the economic calendar we have on Tuesday, European gross domestic product with expectations to remain unchanged at -1.8% On Wednesday, European consumer price index to remain unchanged at 0.8% and FOMC minutes to be release On Thursday, German producer price index expected higher at 1% On Friday, German Markit manufacturing PMI expected lower at 65.8 Markit PMI composite higher at 57.2 European Markit PMI composite higher at 54.9 European consumer confidence higher at -6.8 and US Markit service PMI lower at 64.6
Technically, the picture is positive. Pair closed just below 23.6% at 1.2144 and this keeps a positive bias for the pair. In this week’s trading session if the pair continues on the upside, we are expecting to test the next resistance of 1.2240 If the pair resumes downside and close below 38.2% will change the picture back to neutral with the next level in focus 1.1973 (50%). Our traders start selling the pair at 1.2169 targeting profits at 1.1973 We are expecting more aggressive sellers at 1.2240 Alternative if pair resumes downside buyers will appear around 1.2000 targeting profits at 1.2170
GBP/USD FUNDAMENTALS AND TECHNICALS
Pair closed last week’s trading session higher on Scottish voting results. The Scottish National Party (SNP) won the regional elections north of the border but fell short of an absolute majority. While it continues pushing for a new independence referendum backed by the pro-plebiscite Greens, its lack of a sweeping victory has resulted in some relief for sterling. Moreover, the ruling Conservatives won a closely watched by-election in Hartlepool, cementing their grip on power and providing additional political stability. The vaccination campaign has dramatically cut COVID-19 cases and some speculate that the government could accelerate the timeline for reopening. Over half of the population received at least one jab and roughly a quarter have been given the second dose as well.
As for this week, traders will closely monitor the FOMC minutes and reopening plans in the UK. The economic calendar in the UK will give traders a clearer view of how the UK economy performed last month after many businesses reopened. The more the positive economic releases will result in stronger GBP in hopes that the BOE will do the final step on fiscal policy normalisation. Many BOE officials are due to speak this week and traders must pay extra attention to their comments.
In the economic calendar we have on Tuesday, ILO employment rate to remain unchanged at 4.9% On Wednesday, Consumer price index expected higher at 1.4% retail price index higher at 2.3% On Thursday, Gfk consumer confidence higher at -13 On Friday, Retail sales expected higher at 36.5% Markit services PMI higher at 62
Technically the pair is positive after breaking higher from the triple top of 1.4000 and closing firm higher at 1.4088 In this week’s trading session if the pair trades on the upside and close above 1.4150 the next level to be tested 1.4250 (0%) Alternative if pair resumes the downside the first level to be retested is 1.4000 (23.6%). Our traders are waiting for a pullback around 1.4000 to start buying the pair again. We are expecting short sellers to appear at 1.4250 targeting profits at 1.4000
For more detailed economic calendar events please visit our live economic calendar on:
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