EU To Soften Brexit Transition Stance
IronFX | Feb 16, 2018 06:05AM ET
EU to soften Brexit Transition stance
- Media suggested yesterday that the EU Council may soften its stance towards the Brexit transition deal. Analysts predict that a clearing of the fog regarding the transition deal will play a central role in sterling investors’ minds. Other headlines suggest that London may lose its appeal as a financial center to New York City or other Asian cities after Brexit. It could be indicative that some professionals such as doctors may already have started to avoid the UK as a destination country. We expect some confusion and further headlines affecting the GBP, as we approach the EU Council’s summit near the end of March. A possible confirmation of the EU stance softening towards a transition period could currently strengthen the GBP.
- Cable was in a bull market yesterday breaking the 1.4040(S1) resistance line (now turned to support). We see the case for the pair to continue its upward trend in the short term, contingent mainly to the US dollar further weakening. Should the pair continue to find buying orders, it could break the 1.4168 (R1) resistance level and aim for the 1.4325 (R2) resistance hurdle. Should it on the other hand, find selling orders along its path we could see it see it breaking the 1.4040 (S1) support line and aim for the 1.3850 (S2) support barrier.
Haruhiko Kuroda reappointed BoJ Governor
- Japan’s government reappointed Kuroda as Governor of the Bank of Japan. Also, Masazumi Wakatabe was appointed as BoJ’s Deputy Governor. The appointment of Wakatabe as Deputy Governor could complicate a possible gradual change of BoJ’s ultra-light monetary policy in the near future. On other headlines, Kuroda stated that the central bank should not prematurely announce plans for withdrawing its massive monetary policy stimulus program, a statement which is in line with what was mentioned before. The news could have an adverse effect on the JPY.
- USD/JPY continued to trade in a bearish market yesterday, breaking the 106.95 (R1) support line now turned to resistance. We see the case for the pair to continue in a bearish market as the US dollar weakening may currently overshadow Kuroda’s reappointment. Should the bears continue to be in the driver’s seat, we could see the pair breaking the 104.65 (S1) support line and aim for the 103.65 (S2) support zone. Should the bulls take the reins we could see the reaching the 106.95 (R1) resistance line and probably remaining below the downward trend-line incepted since the 8th of January and tested by the 2nd of February’s peak.
As for today’s other economic events:
- From the UK we get the Retail Sales for January which are forecasted to accelerate, supporting the GBP. Later on from the US we get the Housing starts and Building Permits figures for January. At the same time we get Canada’s Manufacturing Sales for December which could weaken the CAD. As for speakers ECB Board Member Benoit Coeure speaks.
Get The News You Want
GBP/USD
Support: 1.4040(S1), 1.3850(S2), 1.3750(S3)
Resistance: 1.4168(R1), 1.4325(R2), 1.4525(R3)
USD/JPY
Support: 104.66(S1), 103.65(S2), 102.68(S3)
Resistance: 106.95(R1), 108.30(R2), 109.20(R3)
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