HomeContributorsFundamental AnalysisWhat Next For Sterling Amid Brexit Confusion?

What Next For Sterling Amid Brexit Confusion?

The Japanese yen was little moved after mixed economic data. In February, the country’s unemployment rate declined to 2.3% from 2.5% the previous month. Investors were expecting it to remain unchanged. In Tokyo, the core CPI increased to 0.9% in March, which was higher than the expected 0.5%. Still, this is much lower than the 2.0% target of the Bank of Japan. The core CPI remained unchanged at 1.1%. On the other hand, retail sales rose by 0.4%, which was lower than the expected 0.9%.

Traders will continue to focus on the United Kingdom as Brexit confusion continues. Today, Theresa May is expected to present her plan to Parliament again. She has pledged to resign if the deal passes. Meanwhile, the country’s statistics office is expected to release key economic numbers. The final reading of Q4 GDP numbers is expected to remain unchanged at 1.3% while business investment is expected to have dropped by minus 3.7%. In February, mortgage lending is expected to have gained to 3.70 billion pounds. However, traders will likely shrug these numbers and instead focus on the Brexit issue.

The euro continued to decline against the USD ahead of key economic data from Europe. In Germany, the unemployment rate is expected to decline to 4.9% from the previous 5.0%. The unemployment change is expected to drop by 10K. In Italy, the CPI is expected to remain unchanged at 1.0% while that of the European Union is expected to remain at 1.5%. In recent days, the euro has weakened significantly against the USD as traders continue to worry about economic growth. Meanwhile, the market will receive the GDP numbers from Canada. The economy is expected to have grown by 1.5%, which is slightly higher than the previous 1.1%. From the US, traders will receive consumer sentiment numbers and new home sales.

EUR/USD

The EUR/USD pair declined to a low of 1.1210. This was the lowest level since March 8. On the 4-hour chart, the price is below the 25-day and 50-day moving averages. It is also along the lower line of the Bollinger Bands. The On Balance Volume indicator too has continued to decline while the RSI has remained close to the oversold level. Today, the pair could continue moving lower as it attempts to move below 1.1200.

GBP/USD

Sterling moved lower as traders wait for the Brexit vote expected later today. The pair is now trading at 1.3070, which is slightly below the important 38.2% Fibonacci Retracement level. On the daily chart, the pair has formed a symmetrical triangle pattern, which could break-out in either direction. This will depend on the progress on the Brexit issue. If this happens, the key points to watch are the 1.3500 and the 1.2800 levels.

USD/CAD

The USD/CAD rose slightly ahead of the Canadian GDP numbers. The pair is now trading at 1.3430, which is slightly higher than the 25-day and 50-day moving averages. The RSI and the Relative Vigor Index have all remained relatively unchanged. There is a likelihood that the upward trend will continue but it will depend on the GDP numbers.

Octa
Octahttp://octaengine.com/c/?p=203&bt=gif&b=2369
Octa (formerly OctaFX) is an international broker that has been providing online trading services worldwide since 2011. It offers commission-free access to financial markets and a variety of services already utilised by clients from 180 countries with more than 40 million trading accounts.

Featured Analysis

Learn Forex Trading