GBP/USD dropped on the acrimony between the UK and the EU over Brexit. The topic remains left, right and center in the first full week of March. Here are the key events and an updated technical analysis for GBP/USD.
The EU published an explosive draft stating that the UK may be suspended from the Single Market during the transition period, that Ireland will remain in the Customs Union and that the ECJ will continue having power through 2030. UK PM May’s response was swift, saying that no British PM can accept such a deal. The bad blood sent the pound lower. In the US, Trump’s tariffs and potential trade war overshadowed the hawkish stance expressed by Fed Chair Powell, that hinted of four hikes in 2018.
Updates:
GBP/USD daily graph with resistance and support lines on it.
Services PMI: Monday, 9:30. The services sector is the largest in the UK, as in most developed countries. The score is above 50, but not reflecting robust growth. After reaching 53 points in January, a small rise to 53.3 was projected. The actual figure came out better than expected: 54.5 points.
BRC Retail Sales Monitor: The British Retail Consortium’s measure of sales rose by 0.6% y/y in January. The figure for February may disappoint, given the slowdown in consumption. The number pre-empts the official retail sales report.
Andy Haldane talks: Tuesday, 18:15. The BOE Chief Economist will speak in London and may certainly touch on monetary policy. Haldane previously expressed a dovish stance.
Halifax HPI: Wednesday, 8:30. This is one of the most regarded measures of house prices. In January, prices dropped by 0.6%, a second consecutive drop. A bounce of 0.4% is forecast now.
RICS House Price Balance: Thursday, 23:01. The Royal Institution of Chartered Surveyors has shown a positive tilt in the balance between buyers and sellers, worth 8%. A drop to 7% is on the cards now.
Manufacturing Production: Friday, 9:30. While small, the manufacturing sector is still relevant and has enjoyed stronger growth given the weaker pound. After rising by 0.3% in December, an increase of 0.2% is on the cards now. The wider industrial output measure is projected to rise by 1.6% after falling by 1.3% last time.
Goods Trade Balance: Friday, 9:30. Britain has a growing trade deficit that ballooned to 13.6 billion in December. A squeeze to 12 billion is on the cards for January. The publication may have a significant, yet shortlived impact.
Construction Output:Friday, 9:30. Output in the construction sector is volatile, but the wider trends are important. A surprising jump of 1.6% was seen in December. A slide of 0.4% is on the cards for January.
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