FxPro Daily Forex Analysis

[Wayne-FxPro]

The British Pound (GBP) gained on Monday afternoon after UK and EU leaders struck a preliminary agreement for a 21-month Brexit transition. The deal was a positive surprise for GBP, which gained nearly 1% against the US Dollar, reaching its highest level in three weeks. This morning saw the release of UK CPI data, which was softer than expected. CPI rose at an annualized 2.7% against 2.8% forecasted and 0.4% during February against 0.5% expected. Although the CPI data may take some pressure off the Bank of England (BoE) to hike interest rates, policymakers will also be looking at rising wage growth. The Office for National Statistics will release wage growth data on Wednesday. These figures will be an important driver to expectations for interest rates going into the BoE’s announcement on Thursday.

GBPUSD

Yesterday, on the 4-hourly chart, GBPUSD broke above the 50% retracement of the drop from January highs at 1.4020. The pair is now testing the level from above after the CPI data. If 1.4020 holds, a continuation of the bullish move will find resistance at 1.4070, followed by the 61.8% retracement at 1.410 and then 1.4145. A reversal and break of 1.4020 will lead to a move towards major support at 1.3910.


GBPAUD

The recent strength in GBP, combined with continuing weakness in the Australian Dollar, has given the GBPAUD pair a boost to the upside. On the daily chart, the pair broke above long-term resistance at 1.8000 and is now stalling at the Feb 2016 lows near 1.82730. Bullish traders may look to buy any dip to 1.8000, which confirms the breakout. A break of 1.82730 could see a continuation of the trend towards resistance at 1.8500 and then 1.8800. On the flip-side, a bearish reversal below 1.8000 would negate the outlook, with support at 1.7900 and then 1.7600.


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[Wayne-FxPro]

At 09:30 GMT, UK Average Earnings excluding Bonus (3Mo/Yr) (Jan) is expected to come in at 2.6%, from 2.5% previously. Claimant Count Change (Feb) is expected at -5.0K, from a previous reading of -7.2K. ILO Unemployment Rate (3M) (Jan) is expected to be unchanged at 4.4%. Average Earnings including Bonus (3Mo/Yr) (Jan) is expected to be 2.6%, from 2.5% previously. Claimant Count Rate (Feb) was 2.3% previously. Public Sector Net Borrowing (Feb) is expected to be £0.00B, from £-11.62B prior. Wage growth is expected to tick up after stabilizing at 2.5% for the past three months. This is despite the fact that the unemployment rate is at multi-decade lows when wage growth would normally be higher as competition to attract workers takes hold. The BOE will study wage data for any indication of a pick up to see if they need to maintain their hawkish tone. GBP crosses may be influenced by this data release.



At 14:00 GMT, US Existing Home Sales (MoM) (Feb) is expected to be 5.40M, against 5.38M previously. After reaching a seven-year high in November, this data point has slipped lower over the last two months, signalling a little softness in the sector. USD crosses may be moved by this data, as analysts try to understand the impact on the economy.



At 18:00 GMT, the US Fed’s Monetary Policy Statement and Interest Rate Decision, which is expected to be raised to 1.75% from 1.5%, will be released. This hike in rates has been more or less priced into markets and marks the first in a series of expected increases in 2018. The FOMC Economic Projections will be released at the same time. It can be argued that these projections will be of greater importance, as traders look to quantify the pace of rate hikes ahead in the dot plot. The market is pricing in three hikes in 2018, with a slight bias for four that could strengthen the dollar position. At 18:30 GMT, the FOMC Press Conference will take place, as the new Chairman, Jerome Powell, addresses the audience. USD crosses may experience volatility during this time.



At 20:00 GMT, the Reserve Bank of New Zealand Interest Rate Decision is expected to be left unchanged at 1.75%. The Rate statement and the Monetary Policy Statement will be released at the same time. At 21:00 GMT, there will be a press conference discussing the rate decision and monetary policy statement. At the last meeting, the RBNZ forecasted lower GDP and signalled that lower inflation could warrant a rate cut. The NZD fell as a result. NZD could see a spike in volatility after this data is released and during the press conference, with NZD/USD particularly exposed due to central bank risk from the FED and the RBNZ.

 

[Wayne-FxPro]

The UK 100 index has fallen below its February low at 6916.3, painting a bearish picture for 2018. The level was lost in the US session yesterday, and the index reached a low of 6835.7 overnight. Attempts to recover this morning are stalling above 6900.0. The increase in international trade tension has led to a fall in risk sentiment. The UK has been included in a list of exempted countries for the US trade tariffs due to its EU membership. Support below comes in at 6800.0 and 6765.8.

Resistance above comes from the trend lines broken in yesterday’s session, with the blue line at 6968.3 and the red line at 7007.4, a previous level of interest. The 4-hour moving averages are turning sharply lower, with the 50-period at 7055.0, the 100-period at 7115.0 and the 200-period at 7200.0. 7141.8 is the break down level and bulls would need to regain this area to wrest control from the bears.


Silver

Silver has recovered to test its 200-period MA at 16.540, after finding support at the black trend line near 16.335 yesterday. This trend line has been breached on two occasions now but the move back higher on Wednesday presented excellent before and after touches, re-affirming its significance. Price reached up to the 16.661 level before retesting the black line and rebounding. This presents a bullish option for traders, with those missing out on the retest waiting for interaction with the falling blue two-touch trend line at 16.625, to see if price can rally further.

Support is found at the black trend line at 16.340, with the 16.308 level close below. Further support is located at 16.137 and 16.076. Resistance is at 16.661, with 16.753 and the most recent high at 16.869 above. The 17.000 level remains a target to aim for.