GBP/USD has edged lower on Monday, as the pair trades at 1.2340 in North American trade. On the release front, British Rightmove HPI posted a third straight gain, although the March reading of 1.3% was lower than the previous reading of 2.0%. There are no economic events on the schedule in the UK or the US. President Trump will speak at an event in Louisville, Kentucky. As well, FOMC member Charles Evans will deliver a speech in New York City. In the UK, British MPC Member Andy Haldane will speak at the London School of Economics. On Tuesday, the UK releases CPI, which is expected to improve to 2.1%.
British Prime Minister Theresa May has been saying for months that she wanted to trigger Article 50, the mechanism for triggering Brexit, at the end of March. May has stuck to her deadline, as the government announced on Monday that it would formally launch Brexit talks on March 29. The announcement comes after the government passed its Brexit bill last week. Relations between the EU and Britain have soured since the Brexit vote in June, and negotiations promise to be arduous and possibly acrimonious between the parties. The pound has dipped lower on the Brexit announcement.
The Federal Reserve raised rates by a quarter-point last week, but the US dollar responded with broad losses. The Canadian dollar took advantage, gaining 1 percent last week. Why the negative reaction from the greenback? Firstly, there was disappointment in the markets with the Fed policy statement, which was more dovish than expected. The rate move was priced in at over 90 percent, and there had been speculation that a red-hot US economy would propel the Fed to accelerate its pace of monetary tightening, with possibly four rate hikes this year. Instead, Fed Chair Janet Yellen reiterated that further rate hikes would be “gradual” and the Fed made no changes to its “dot plot”, with a projection for three rate hikes in 2017. As well, the US dollar may have lost ground due to traders and investors acting on “buy on rumor, sell on fact”.
What’s next for Janet Yellen & Co? Analysts do not expect another rate move in May, while a hike in June is currently priced in at 50%. The markets will be looking for clues about the Fed’s monetary plans. A host of FOMC members will be speaking this weak, highlighted by Janet Yellen’s speech on Thursday at an event in Washington. The market will be looking for clues regarding monetary policy. In the past, Fed policymakers have presented conflicting positions, and if the market senses divisions within the Fed, the US dollar could lose ground.
Sunday (March 19)
- 20:01 British Rightmove HPI. Actual 1.3%
Monday (March 20)
- 13:10 US FOMC Member Charles Evans Speech
- 14:20 British MPC Member Andy Haldane Speech
- 19:30 US President Trump Speech
Tuesday (March 21)
- 5:30 British CPI. Estimate 2.1%
*All release times are GMT
*Key events are in bold
GBP/USD for Monday, March 20, 2017
GBP/USD March 20 at 12:15 EST
Open: 1.2383 High: 1.2436 Low: 1.2341 Close: 1.2344
- GBP/USD showed limited movement in the Asian and European sessions. The pair has posted losses in North American trade
- 1.2272 is providing support
- 1.2351 is fluid. Currently, it is a weak resistance line
Further levels in both directions:
- Below: 1.2272, 1.2143 and 1.2033
- Above: 1.2351, 1.2471, 1.2571 and 1.2706
- Current range: 1.2272 to 1.2351
OANDA’s Open Positions Ratio
In the Monday session, GBP/USD ratio shows long positions with a majority (62%). This is indicative of trader bias towards GBP/USD reversing directions and climbing higher.