Sample Category Title

After rumors that Northern Ireland DUP has privately given conditional agreement to UK Prime Minister Theresa May's Brexit deal, its deputy leader Nigel Dodds echoed that support. Dodds said "We want to reach a consensus which respects the constitutional and economic integrity of the United Kingdom and which also works for our neighbours in the Republic of Ireland". And, "the trap of the backstop is the problem," he added. "There are ways forward which do not require this backstop and we need to see a willingness to explore such options."

Meanwhile EU and Ireland are stepping up preparations for no-deal Brexit. European Commission spokesman Margaritis Schinas confirmed that Commission President Jean-Claude Juncker and Irish Prime Minister Leo Varadkar had spoken yesterday. And, they had "looked forward to continuing close cooperation ... including on intensifying no deal contingency action in the coming weeks".

USD/CAD has posted slight gains in the Friday session. Currently, the pair is trading at 1.3318, down 0.29% on the day. On the release front, there are no Canadian or U.S. events on the schedule.

Considering the weak performance of Canadian indicators this week, the Canadian dollar has done well, with only modest losses against the greenback. Manufacturing Sales declined by 1.4% in November, its sharpest decline in over a year. Consumer spending also sagged in November. Retail Sales and Core Retail Sales both recorded declines, with readings of -0.9% and -0.3%, respectively. The economy will receive a report card next week, with the release of the monthly GDP report. This key event should be treated as a market-mover.

There was good news from the U.S. labor market, as unemployment claims dropped sharply, from 213 thousand to 199 thousand. This was the first time that the indicator dropped below the 200-thousand level since 1969. The four-week average, which is less volatile, dropped by 5.5 thousand to 215,000. The strong figures indicate that the employment picture remains bright, despite the ongoing U.S. government shutdown, which has resulted in the layoff of some 800,000 government workers.

WTI oil ticked higher on Friday and eventually penetrated thick daily cloud after cloud base capped attempts in past few sessions. Fresh boost for oil price came from political turmoil in Venezuela that raises concerns about potential output disruption. Also, US crude stocks rose strongly in the previous week, adding to the upside pressure. Thursday's bullish engulfing was positive signal, however, daily techs are still mixed and provide no clear signal for now. Close within cloud would keep bullish bias but signals of bullish continuation could be expected on break above pivots at $54.48 (2019 high posted on 21 Jan) and $55.55 (Fibo 38.2% of $76.88/$42.36). Broken 55SMA / cloud base ($51.52/14) provide solid supports which are expected to contain deeper corrective dips.

Res: 53.91; 54.48; 55.00; 55.55
Sup: 53.03; 52.55; 51.52; 51.14

Long GBP traders appear to base their investment decision on headlines, despite continued uncertainties as to the future relations between the UK and the EU. The recent news suggests that the Northern Ireland Party, which continuously opposed May’s Withdrawal Agreement, would finally back May’s Brexit plan, however with one condition: a time limited or the complete removal of the Irish backstop. Therefore, the recent Sterling optimism remains highly misplaced, as the EU already confirmed it is not willing to provide further concessions.

Indeed, despite a higher likelihood of seeing the British Parliament supporting a postponement of current Brexit deadline next Tuesday (separation due in 63 days), and extensively supporting a softer Brexit looking forward, worries from companies implanted in the UK is rising. In the worst-case scenario, UK-exported products ruled under World Trade Organization agreements would be subject to a 10% tax, costing along 4 – 7 % of car manufacturer’s yearly operating profits present in the region, forcing them to close existing plants and move to EU shipping compliant countries.

Accordingly, although a disorderly Brexit remains highly unlikely, we would therefore remain cautious on long GBP positions, since the risk of a setback is very likely. Currently trading at 1.3082, GBP/USD is expected to head along 1.3015 short-term.

Friday January 25: Five things the markets are talking about

Global equities and U.S futures are trying to close out the week on firmer footing. Equity direction continues to depend on investors weighing up corporate earnings reports and concerns about the global economy.

Market fears of slumping global growth has been taking the shine off a better-than-expected U.S corporate earnings season. Are the world’s two largest economies making progress? Yesterday, U.S Commerce Secretary Ross said that the U.S is “miles and miles” from a trade deal, but there is a fair chance a deal will get done.

Heading into the N. American session, the ‘big’ dollar trades under pressure against most G10 currency pairs, while U.S treasury yields back up along with some Euro sovereign bonds. Sterling hit a new 20-month high overnight on rumored reports that N. Ireland’s DUP would be backing PM May’s Brexit Plan B next week.

Note: Brexit – PM May is expected to table her Plan B to Parliament on Jan 29. As per the last go around, MP’s will then table amendments and the speaker will choose which will be voted on.

In commodities, crude oil prices rally as a “deepening crisis” in Venezuela threatens to make OPEC+’s job of balancing global oil supplies a tad bit more difficult. Even a surprise in U.S inventories has been unable to keep the ‘black stuff’ down.

Yesterday, the European Central Bank (ECB) did what was expected, left rates on hold, while turning a tad more ‘dovish’ than in December. Basically, there is no sign of any fundamental change in their monetary policy stance – other tools remain at the disposal of the central bank to help return to higher levels of core-inflation.

Capital markets will now have to wait for March when there should be more clarity on issues with regard to the risks stemming from Brexit, the U.S government shutdown and the Sino-U.S trade dispute.

On tap: There are no major economic ccalendar releases on the weekend. Down-under, it’s a bank holiday in Australia (Jan 27/28).

1. Stocks see green

In Japan, the Nikkei rallied overnight as chip-related firms extended gains, mirroring gains from their U.S counterparts, while investors looked to major events next week for direction (Sino-U.S trade talks and NFP). The Nikkei share average rose +1.0% at the close, while the broader Topix gained +0.9%.

Down-under, Aussie stocks rallied overnight, capping their third consecutive week of gains, as higher commodity prices supported energy and mining stocks. The S&P/ASX 200 index closed up +0.7%, advancing +0.4% for the week. In S. Korea, chip makers helped lifted the Kospi +1.5%, its biggest daily gain in nearly two-weeks. For the week, the benchmark index gained +2.5%, while it jumped +6.7% on the month.

In China, stocks rallied, helped by strength in banking stocks, after regulators unveiled measures to help lenders replenish capital. However, ongoing worries over Sino-U.S trade talks continue to cap gains. At the close, the blue-chip CSI300 index rose +0.8%, while the Shanghai Composite Index gained +0.4%.

In Europe, regional bourses trade higher across the board following on from a stronger session in Asia and higher futures in the U.S.

U.S stocks are set to open in the ‘black’ (+0.6%).

Indices: Stoxx600 +0.6% at 357.8, FTSE +0.1% at 6827, DAX +1.1% at 11256, CAC-40 +0.6% at 4902, IBEX-35 +0.2% at 9170, FTSE MIB +0.6% at 19673, SMI +0.1% at 8950, S&P 500 Futures +0.6%

2. Oil prices climb on threat of sanctions against Venezuela, gold higher

Ahead of the U.S open, global oil prices remain bid as turmoil in Venezuela has generated concerns that its crude exports could soon be disrupted.

Brent futures are at +$61.62 a barrel, up +53c or +0.9% – Brent has lost about -1.8% this week and remains on track to post its first week of losses in four-weeks, while U.S West Texas Intermediate (WTI) crude futures are at +$53.70 per barrel, up +57c, or +1.1%.

Note: In Venezuela this week, opposition leader Juan Guaido declared himself interim president, winning backing from U.S and and large parts of Latin America.

Despite plummeting supplies in recent years, the market has been pricing in the risk to Venezuela’s crude production – approx. +1M bpd. However, global markets remain well supplied (U.S production has increased by +2M bpd in 2018) and should cap price rallies in the short-term.

The swell in U.S output has resulted in huge U.S fuel inventories. EIA data yesterday showed U.S gas inventories have rallied for an eighth consecutive week in the week to Jan. 18, by +4.1M barrels to a record +259.6M barrels, while crude inventories rose by +8M barrels.

Global demand may begin to wane even further as a global economic slowdown is likely to dent fuel consumption.

Gold prices are closing out the week better bid on concerns about a prolonged U.S government shutdown and as markets wait on Sino-U.S trade talks due next week. Spot gold has rallied +0.3% to +$1,284.31 per ounce since Thursday’s close, while U.S gold futures have climbed +0.2% to +$1,283.10 per ounce.

3. Bad news for EU growth is good news for bonds

Core-eurozone bond yields are struggling to find traction, a day after falling sharply due to downbeat comments from the ECB who acknowledged weaker economic growth at yesterday’s monetary policy meeting.

Core bond yields fell to two-week low after the ECB’s news conference at which Draghi acknowledged key economic risks, ranging from trade wars to Brexit. His ‘dovish’ comments have pushed back further along the curve market expectations of when the ECB will next hike rates.

Note: The ECB expects key interest rates to remain at their present levels at least through the summer of 2019, while markets have already pushed out the first hike expectations to June 2020.

The yield on Germany’s 10-year Bund, fell -4.6 bps yesterday, its biggest one-day drop since January 2. In France, 10-year government OAT yields also fell by almost -5 bps to +0.59%, while Spanish 10-year government bond yields dropped -8.2 bps, the biggest one-day fall in seven months, to +1.25%.

Elsewhere, the yield on 10-year Treasuries has gained less than +1 bps to +2.72%, while in the U.K, the 10-year Gilt yield has gained +1 bps to +1.279%.

4. Dollar sees red across the board

The EUR (€1.334) continues to hover within striking distance of its three-year low, but trades above the psychological €1.13 level after the ECB revised their language on economic risks at yesterday’s monetary policy announcement. Many believe, despite the change in ECB’s copy, the regional impact does not have any immediate impact on the ECB’s monetary policy stance, but the change in sentiment on risks infers ECB rate hike delay to its current guidance of the first potential hike after summer 2019. Today’s German IFO data (see below) should reinforce this view.

GBP/USD (£1.3076) is again looking to approach the £1.31 area for its 20-month high, supported by rumored reports overnight that Northern Ireland’s DUP party would back PM May’s Brexit withdrawal deal in parliament next week when she ‘toughened it up’ (looking to implement a ‘time limit’ on the Irish border).

Some risk appetite sentiment helped the USD/JPY (¥109.82) pair edge closer to the psychological ¥110 handle.

5. German business sentiment drops to a three-year low

Data this morning showed that German business sentiment deteriorated sharply this month, further proof that H2 German economic troubles are spreading into Q1, 2019.

The Ifo Institute said that its business-climate index fell to 99.1 points in January from 101.0 points in December. Market expectations were looking for a 100.6 forecast print. Today’s headline marks the lowest level since February 2016.

“The German economy is experiencing a downturn,” Ifo President Clemens Fuest said. In manufacturing, the business climate deteriorated in all of the key business sectors apart from chemicals, the Ifo said.

Note: A survey of purchasing managers by IHS Markit yesterday showed that German manufacturing activity contracted at the start of the year, while services activity picked up in January.

Weaker German data this week is firm evidence that the eurozone’s strongest economy is stalling.

The DAX index has recorded sharp gains in the Friday session. Currently, the index is at 11,283, up 1.38% on the day. In economic news, there is only event. German Ifo Business Climate, fell for a fifth successive month, dropping to 99.1 points. This was shy of the estimate of 100.7 points.

German stock markets have moved higher on Friday, and the DAX has climbed to its highest gains since late November.

The catalyst for the upward movement was positive news from U.S. technology companies on Thursday. On the NASDAQ, Xilnix, Lam Research and Texas Instruments all posted better-than-expected results, and this has boosted Asian and European markets on Friday. Most listings on the DAX are in positive territory, and Deutsche Bank, Daimler and Volkswagen have all recorded gains above 2 percent.

There were no surprises from the ECB on Thursday, as the central bank maintained policy as well as guidance for “rates to remain at their present levels at least through the summer of 2019”. With the ECB finally winding up its massive stimulus scheme, market focus has shifted to the timing of a rate hike. However, with the eurozone economy showing signs of weakness, we’re unlikely to see a rate hike before the fourth quarter, at the earliest. The ECB remains cautious, and said that risks “have moved to the downside”. This dovish stance indicates that the euro will not be receiving any support from the bank, and will have to rely on stronger data in order to attract investors.

Notes/Observations

• ECB members out in force reiterating the Draghi press conference theme that the balance of risks were to the downside at this time
• German Jan IFO Survey misses expectations and reinforced ECB view that economic risks were to the downside

Asia:

• US-Japan trade talks likely to be delayed until Feb with the continued partial US government shutdown cited as the reason

Europe:

• Northern Ireland's DUP party (part of coalition) said to have privately agreed to support PM May's Brexit deal when she 'toughened it up' (aka Irish border had a time limit)
• Ireland Central Bank Quarterly Bulletin: Disorderly Brexit could reduce growth rate of domestic economy by up to 4 percentage points in first full year. Disorderly Brexit could lower 2019 GDP growth to 1.5% from a level of 4.4% if a disorderly Brexit was avoided)

Americas:

• Treasury Sec Mnuchin stated that US and China were making a lot of progress in trade talks and looking forward to meetings. CNY currency (Yuan) was only one important aspect of China trade talks and issue to be discussed at next week's trade talks
• Senate blocked Democratic govt funding package which did not include border wall (as expected)
• Senate blocked Pres Trump's govt funding package which included border wall funding (as expected). Democrats said to still not support any kind of border wall funds, this position was made clear to Senate Majority Leader McConnell (R)
• Venezuela President Maduro: I will never resign as president. The leader of Venezuela's armed forces declared loyalty to Mr. Maduro and said the opposition's effort to replace him amounted to an attempted coup. Russia warned the United States not to intervene.

Macro

• (UK) United Kingdom: Reports that the DUP will back the Prime Minister May's Withdrawal Agreement at next Tuesday's second vote, as long as there is a clear time limit on the Irish backstop, sparked a rally in sterling. UK press are also widely reporting that the risk of a no-deal Brexit "accident" could shore up support for a deal next week, especially if Brussel's offers a last minute concession.
• (EU) Eurozone: The ECB's Coeure said it was too early to discuss whether the governing council will hike rates this year, adding though that have to adjust rate guidance at some point. He did admit that the economic slowdown has surprised the ECB but suggested t wouldn't be prolonged. Coeure stressed that the central bank will not offer a new round of TLTROs just for banks to cope with net stable funding ratios that are part of the new international liquidity standards.
• (DE) Germany: The January IFO ewas much weaker than expected with headline reading dropping to 99.1 from 101 in Dcember. The expectations index dropped to 94.2. Although the muted reaction would suggest that the market has started to look at weak data as increasing the probability of ECB policy normalization and a rate hike being priced out.

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

• Indices [Stoxx600 +0.6% at 357.8, FTSE +0.1% at 6827, DAX +1.1% at 11256, CAC-40 +0.6% at 4902, IBEX-35 +0.2% at 9170, FTSE MIB +0.6% at 19673, SMI +0.1% at 8950, S&P 500 Futures +0.6%]
• Market Focal Points/Key Themes: European Indices trade higher across the board following on from a stronger session in Asia and higher futures in the US. On the corporate front the tone was set after notable earnings from US names Intel Starbucks and Western Digital overnight. In Europe shares of Vodafone fall to a 8 and half year low after its Q3 update as Revenue fell; Givaudan and Telia also trade lower after profits missed estimates. Meanwhile Ericsson shares trade higher after a top and bottom line beat, with Scatec Solar, Bonmarche and Findel among names trading higher on earnings. Fuller Smith and Turner trades over 15% higher after divesting their beer business and upbeat trading statement; Prosiebensat trades higher on bid talk, while Midatech Pharma trades over 50% lower FDA feedback would not support a new drug application for Scenario 1 of MTD201. Looking ahead notable earners include Catepillar, Scorpio Bulkers and Bank of Hawaii.

Equities

• Consumer discretionary: ASOS [ASC.UK] +2.5%, Boohoo [BOO.UK] +1.5% (Govt ruled out an online sales tax proposed to help high street vendors in the country), Byggmax Group [BMAX.SE] -9.5% (earnings)Bonmarche Holdings [BON.UK] +10% (trading update), Givaudan [GIVN.CH] -3.5% (earnings)
• Consumer staples: Fuller Smith & Turner [FSTA.UK] +16% (to divest unit)
• Healthcare: Midatech Pharma [MTPH.UK] -53% (FDA feedback)
• Industrials: Renault [RNO.FR] +3.5% (new management speaks on alliance with Nissan)
• Technology: Siemens [SIE.DE] +2%, Alstom [ALO.FR] +1% (EU commission said to reject deal by Feb 6th), NEXT Biometrics [NEXT.NO] -23% (placing)
• Telecom: Vodafone [VOD.UK] -1% (earnings), Ericsson [ERICB.SE] +3% (earnings), Telia Company [TELIA.SE] -4% (earnings), BT Group [BT.A.UK] +0.5% (first to be awarded license from China Ministry of Industry and Information Technology), Telefonica [TEF.ES] n/c (divestments)

Speakers

• ECB's Coeure (France) reiterated the ECB Council view that saw quite a lot of political uncertainty, Economic slowdown had surprised the ECB but that the Jury was still out on how persistent slowdown would be. Too early to discuss whether ECB would hike in 2019 but ECB might have to adjust rate guidance at some point. ECB would not offer new loans just for banks' NSFR rules
• ECB's Villeroy (France): Reiterates Council view that uncertainty was the main explanation of economic slowdown. likely to downgrade growth at the March Staff Projections. Rate hike in 2019 to depend on the state of the economy. Reduction of stimulus to be very gradual; committed to keeping interest rates low
• ECB's Vasiliauskas (Lithuania) reiterated Council view that balance of risks are to the downside; upcoming March meeting to focus on balance of risks. Saw no reason to change the forward guidance at this time. Expected forecasts to be revised in March
• ECB Survey of Professional Forecasters (SPF) cut both the growth and inflation outlook for the forecast horizon. Cuts 2019 HICP (EU Harmonized CPI) from 1.7% to 1.5% and 2020 EU Harmonized CPI from 1.7% to 1.6%. Cut 2019 GDP growth from 1.8% to 1.5% and 2020 GDP growth forecast from 1.6% to 1.5%
• France Fin Min Le Maire reiterates EU stance that there could not be any reopening of the Brexit deal but would be open to clarifications
• UK Chancellor of the Exchequer Hammond (Fin Min): Risk of a no-deal Brexit was very real; would not rule out resigning from a no-deal Brexit outcome. Did not view the upcoming Parliamentary vote (Tues, Jan 29th) as the 'high noon' of the Brexit debate. Removing Brexit deadline would take pressure off
• German IFO Economists commented that the domestic economy was experiencing a downturn as demand from both domestic and overseas sources were weakening. Brexit and US govt shutdown were dampening the business climate
• Poland Central Bank's Hardt: Less likely that 2019 inflation would hit the 2.5% target. March Staff Projections to show lower CPI compare to the Nov forecast. Saw 2019 GDP growth around 4.0%. Hard Brexit would not impact the PLN currency (Zloty) exchange rate or Polish monetary policy

Currencies/Fixed Income

• Euro hovering near its recent 3-week lows but holding above the 1.13 level after the ECB revised language on economic risks. ( **Reminder: On Jan 24th ECB's Draghi post rate decision press conference revised the language on its growth outlook from 'broadly balanced' to risks moved to the downside). Dealers noted that the change in the assessment of the economic outlook did not have any immediate impact on the ECB monetary policy stance and kept a floor in the pair for the time being but the sentiment built that the tweak in ECB language on risks implied rate hike delay to its current guidance of the 1st potential hike after summer 2019. The German IFO data reinforced this view.
• GBP/USD approaching the 1.31 area for 20-month highs aided by reports overnight that the Northern Ireland DUP party would back PM May's Brexit withdrawal deal in parliament next week when she 'toughened it up' (aka Irish border had a time limit)
• Some risk appetite sentiment helped the USD/JPY pair edge closer to the psychological 110 level.

Economic Data

• (NL) Netherlands Dec House Price Index M/M: -0.6 v +0.3% prior; Y/Y: 8.4 v 9.3% prior
• (NO) Norway Q4 Industrial Confidence: 9.0 v 8.0e
• (TR) Turkey Jan Real Sector Confidence SA: 95.4 v 97.7 prior; Real Sector Confidence NSA: 93.0 v 91.5 prior; Capacity Utilization: 74.4% v 74.1% prior
• (CN) Weekly Shanghai copper inventories (SHFE): 119.7K v 100.9KK tons prior
• (ES) Spain Dec PPI M/M: -1.1% v -1.1% prior; Y/Y: 1.6% v 2.9% prior
• (AT) Austria Industrial Production M/M: -2.4% v +2.1% prior; Y/Y: 1.0% v 5.7% prior
• (RU) Russia Narrow Money Supply w/e Jan 18th (RUB): 10.38 v 10.42T prior
• (SE) Sweden Dec Retail Sales M/M: -1.4% v +0.1%e; Y/Y: -1.1% v +1.2%e
• (SE) Sweden Dec PPI M/M: -0.6% v 0.0% prior; Y/Y: 5.6% v 7.9% prior
• (DE) Germany Jan IFO Business Climate Survey: 99.1 v 100.7e; Current Assessment: 104.3 v 104.2e; Expectations Survey: 94.2 v 97.1e
• (UK) Dec BBA Loans for Housing: 38.8K v 38.8Ke
• (BR) Brazil Jan FGV Consumer Confidence: 96.6 v 93.0 prior

Fixed Income Issuance

• (IN) India sold total INR120B vs. INR120B indicated in 2024, 2029, 2033 and 2055 bonds
• (ZA) South Africa sold total ZAR650M vs. ZAR650M indicated in I/ L 2025, 2033 and 2046 bonds
• (IT) Italy Debt Agency (Tesoro) sold total €1.25B vs. €0.75-1.25B indicated range in Inflation-linked 2028 and 2041 BTP bonds (BTPei)
• (IT) Italy Debt Agency (Tesoro) sold €2.5B vs. €2.0-2.5B indicated range in Zero Coupon Nov 2020 CTZ; Avg Yield: 0.366% v 0.699% prior; Bid-to-cover: 1.47x v 1.78x prior

Looking Ahead

• 05:30 (PL) Poland to sell Bonds
• 06:00 (UK) Jan CBI Retailing Reported sales: +3e v -13 prior; Total Distribution: No est v 10 prior
• 06:00 (FR) France Q4 Total Jobseekers: no est v 3.457M prior
• 06:00 (UK) DMO to sell €4.0B in 1-month, 3-month and 6-month bills (£0.5B, £2.0B and £1.5B respectively)
• 06:30 (CL) Chile Central Bank Traders Survey
• 06:30 (IN) India Weekly Forex Reserves w/e Jan 18th: No est v $397.4B prior
• 06:45 (US) Daily Libor Fixing
• 08:00 (RU) Russia Dec Unemployment Rate: 4.8%e v 4.8% prior; Real Wages Y/Y: 4.4%e v 4.6% prior; Real Disposable Income: -1.0%e v -2.9% prior
• 08:00 (RU) Russia Dec Real Retail Sales Y/Y: 3.0%e v 3.0% prior
• 08:00 (IN) India announces upcoming bill issuance (held on Wed)
• 08:00 (UK) Baltic Dry Bulk Index
• 08:30 (US) Dec Preliminary Durable Goods data delayed by partial US govt shutdown)
• 09:00 (MX) Mexico Nov Retail Sales M/M: +0.2%e v -1.0% prior; Y/Y: 3.5%e v 3.0% prior
• 09:00 (BE) Belgium Jan Business Confidence: -1.5e v -0.9 prior
• 10:00 (US) Dec New Home Sales data delayed by partial US govt shutdown)
• 13:00 (US) Weekly Baker Hughes rig count data

The pair maintains positive near-term tone and ticked higher on Friday's Asian / European trading, holding in the upper part of week-long 109.05/109.99 congestion and pressuring key barrier at 110.00 (psychological resistance reinforced by falling 30SMA. Lack of bullish momentum keeps the price below 110.00 for now, with sustained break here needed to generate bullish signal for continuation of recovery. Mixed daily studies signal further lack of clearer direction signal, with another failure to clear 110 pivot, likely to soften near-term structure. Focus turns towards US Durables and Housing data (due later today) which could provide fresh signals.

Res: 110.00, 110.22, 110.47, 111.22
Sup: 109.51, 109.29, 109.05, 108.63

During Thursday's Draghi's speech, the European Single Currency depreciated against the US Dollar to pass through the support levels of the monthly S1 and the weekly S1 to end the trading session at the 1.3005 mark. Besides, the chart was thoroughly reviewed and corrected!

In regards to the near-term future, it is expected, that the rate will be retraced by the 55-hour and the 100-hour simple moving averages towards the weekly S2 at 1.1262.

On the other hand, the European Single Currency might break the resistance levels of the SMAs to trade near the weekly pivot point at the 1.1402 mark.

During yesterday's midnight hours, the currency exchange rate broke the pattern line at the 1.3100 mark. The breakout meant that the United Kingdom and Ireland would agree not to build an outpost in Northern Ireland.

In regards to the near-term future, most likely, the British Pound will be supported by the 55-hour simple moving average and the monthly R2 to surge towards the 50.00% Fibonacci retracement level.

However, the expectations might be broken to let the rate to trade between the simple moving averages at the 1.2950 level.