GBP/USD: Further developments on Brexit, US-China trade deal awaited amid recent recovery
- The GBP/USD pair took a U-turn from the early-day Brexit driven declines
- 1.3240 and 50-day SMA continues to be the important levels to watch
GBP/USD is on the bids near the intra-day high of 1.3190 ahead of London open on Thursday. The quote earlier dropped to a week’s low on the pessimistic Brexit headlines but recovered afterward as developments surrounding the US-China trade deal and comments from the Chinese Premier pleased global investors to trim greenback buying.
Earlier on Thursday, the members of the UK parliament (MPs) turned down all the eight Brexit proposals that were highlighted in case parliament takes the departure process control from the government. Even if the same could have garnered support for the PM Theresa May’s third Brexit proposal, comments from her alliance DUP and an influential Tory lawmaker, Jacob Rees-Mogg, signal she will still be defeated on Friday.
The US delegates comprising the Treasury Secretary Steve Mnuchin and the Trade Representative Robert Lighthizer are in Beijing for a two-day visit to negotiate the trade deal. The event undoubtedly gained market attention when Reuters reported the positive developments quoting the US policymaker. Also, upbeat comments from the Chinese Premier Li Keqiang further steered traders off the US Dollar.
While recent market moves highlight the importance of the reports from Beijing, the UK PM May also needs to struggle for gaining enough support for her Brexit deal if she is ready to face another vote on Friday. Adding to this, the final reading of the US fourth quarter (Q4) gross domestic product (GDP) will also acquire the investors’ attention. The US Q4 2018 annualized GDP may weaken to 2.4% from 2.6% prior.
GBP/USD Technical Analysis
Unless offering a day’s close beneath 50-day simple moving average (SMA) figure of 1.3080, the chances of the GBP/USD pair’s pullback to 1.3240 and 1.3280 can’t be turned down. However, 1.3310 and 1.3380 could challenge the bulls afterward.
If at all sellers manage to drag the quote under 1.3080, the 1.3030 and 1.3000 can please them ahead of highlighting 200-day SMA level of 1.2980.
EUR/USD Daily Price Forecast – Dovish Stances Of Major Central Banks Capped The Early Gains For The Pair
US Q4 GDP numbers will have a significant impact on the global economy undermined on recession fears. The SMAs for major days lie above the pair’s trading level, revealing a bearish outlook.
The EUR/USD experienced a minor correction on the early hours of the Thursday trading session following an escalation in the US Dollar Index. The index had soared on the grounds of an increasing dovish outlook of the major world banks.
Yesterday, ECB President Mario Draghi had warned of sustained downside risk for the global economy. Reserve Bank of New Zealand (RBNZ) kept the interest rates unchanged but hinted of a likely rate cut to happen soon before and in November. The Cable pair remained subtle at 1.3187 level following the UK PM May’s proclamation that she will get down from her premiership if MPs backed her twice-rejected deal for a Brexit.
At the time of writing this article (05:50 GMT), the pair was trading at 1.1258 level.
Amidst the fragile global economic environment, the EUR/USD may find some light to stay positive at the day’s closing underpinned the following key events to happen today.
By 10:00 GMT, (Medium Volatile Event)
European Commission will release the Business Climate Indicator for March. The consensus estimates the index to come around 0.66 points as compared to the previous 0.69 points. There is an evident connection between the business climate index and the industrial production of the region. Hence, this event must be watched closely today.
By 12:30 GMT, (High Volatile Event)
The US Bureau of Economic Analysis will release the US Gross Domestic Product (GDP) Annualized number for the fourth fiscal quarter. Last week, the world market was alerted on the possibility of a recession to happen in the near term on the occurrence of an inverted yield curve which preceded every recession occurred till date.
The market is awaiting the US GDP to come before adding a double down that a recession is imminent. This event is highly significant to all the major currency pairs which include EUR/USD. The Street Analysts have taken a bearish stance on the GDP number expecting it to report around 2.4 percent which is below the previous GDP of 2.6 percent.
By 13:00 GMT, (High Volatile Event)
Destatis, the Statistical Office of the EU, will release the Harmonized Index of Consumer Prices (HICP) index YoY for March. The consensus estimates the HICP index to report around 1.6 percent which is lower to the previous HICP index of 1.7 percent. Retrospective data reveals good volatility observed in the EUR/USD pair following the release of the HICP index.
Stock Market News
U.K. stocks lower at close of trade; Investing.com United Kingdom 100 down 0.05%
U.K. stocks were lower after the close on Wednesday, as losses in the Healthcare Equipment & Services, Automobiles & Parts and Mobile Telecommunications sectors led shares lower.
At the close in London, the Investing.com United Kingdom 100 declined 0.05%.
The best performers of the session on the Investing.com United Kingdom 100 were Provident Financial PLC (LON:PFG), which rose 3.83% or 19.60 points to trade at 531.80 at the close. Meanwhile, Intu Properties PLC (LON:INTUP) added 3.14% or 3.25 points to end at 106.70 and EasyJet PLC (LON:EZJ) was up 3.03% or 34.00 points to 1157.00 in late trade.
The worst performers of the session were Old Mutual Ltd (LON:OMU), which fell 3.35% or 3.92 points to trade at 113.28 at the close. Fresnillo PLC (LON:FRES) declined 2.02% or 17.60 points to end at 854.40 and Antofagasta PLC (LON:ANTO) was down 1.93% or 18.20 points to 923.40.
Falling stocks outnumbered advancing ones on the London Stock Exchange by 1060 to 997 and 342 ended unchanged.
Gold Futures for June delivery was down 0.29% or 3.85 to $1317.55 a troy ounce. Elsewhere in commodities trading, Crude oil for delivery in May fell 0.98% or 0.59 to hit $59.35 a barrel, while the June Brent oil contract fell 0.27% or 0.18 to trade at $67.25 a barrel.
Wall Street ends down as Treasury yields fall on slowdown worries
U.S. stocks eased on Wednesday as Treasury bond yields fell again and a prolonged inversion in the yield curve fanned fears of a U.S. economic slowdown.
Benchmark 10-year Treasury yields slid, but came off 15-month lows reached overnight, as investors remained focused on central bank dovishness globally.
The yield curve inverted for the first time since 2007 on Friday and, if the inversion persists, some experts say it could indicate a recession is likely in one to two years.
Bank and financial stocks fell, with the S&P 500 financial index ending down 0.4 percent.
“The inverted yield curve, that’s what worries investors and it’s why you’re getting selling here. It’s definitely a slowing economy indicator, and whether it goes into a recession or not, nobody really knows. But it will put a pause in the market,” said Alan Lancz, president of Alan B. Lancz & Associates Inc, an investment advisory firm based in Toledo, Ohio.
Worries about global growth have risen recently amid weak economic data, and the Federal Reserve last week abandoned projections for any interest rate hikes this year.
The European Central Bank became the latest central bank to delay a planned increase in rates amid rising threats to growth.
The Dow Jones Industrial Average fell 32.14 points, or 0.13 percent, to 25,625.59, the S&P 500 lost 13.09 points, or 0.46 percent, to 2,805.37 and the Nasdaq Composite dropped 48.15 points, or 0.63 percent, to 7,643.38.
Lennar Corp rose 3.9 percent as the No. 2 U.S. homebuilder said it expected the housing market to improve, while shares of KB Home, which reported upbeat results late Tuesday, were up 2.7 percent.
Also helping was a survey that showed mortgage applications in the week ended March 22 rose nearly 9 percent amid lower interest rates, according to the Mortgage Bankers Association.
Centene Corp’s shares fell 5 percent after the health insurer said it would buy smaller rival WellCare Health Plans Inc for $15.27 billion. Shares of WellCare jumped 12.3 percent.
Declining issues outnumbered advancing ones on the NYSE by a 1.26-to-1 ratio; on Nasdaq, a 1.39-to-1 ratio favored decliners.
The S&P 500 posted 29 new 52-week highs and 6 new lows; the Nasdaq Composite recorded 32 new highs and 64 new lows.
Volume on U.S. exchanges was 6.97 billion shares, compared with the 7.64 billion-share average for the full session over the last 20 trading days.
CFTC Technology Advisory Committee Discusses Crypto Regulation and DLT Adoption
The Technology Advisory Committee of the United States Commodity Futures Trading Commission (CFTC) discussed crypto regulation and distributed ledger technology (DLT) adoption during a meeting on Wednesday, March 27.
The committee discussed various reports on cryptocurrencies and DLT. The first was presented by Peter Van Valkenburgh, Director of Research at Coin Center, who spoke on various consensus mechanisms.
Referring to this topic, CFTC Commissioner Brian Quintenz said in his opening statement that Ethereum’s plan to shift from a proof-of-work (PoW) to proof-of-stake (PoS) consensus raises important regulatory questions, including the possibility of manipulating or falsifying the ledger.
Another report was presented by Kathryn Trkla and Charley Mills, members of the American Bar Association’s Jurisdiction Working Group. Their speech was dedicated to a recent report, dubbed “Digital and Digitized Assets: Federal and State Jurisdictional Issues.” In it the association reviewed the current state of crypto and blockchain regulation in the U.S., Malta, Switzerland and other countries.
The Distributed Ledger Technology and Market Infrastructure Subcommittee presented its report on the current state of DLT adoption and the potential use cases of the technology. The panel also addressed particular areas where the CFTC’s guidance could contribute to the further development of DLT.
The committee also discussed a report by the International Swaps and Derivatives Association (ISDA) about the recent release of the Common Domain Model 2.0 for interest rate and credit derivatives. The talk focused on the ability to digitize financial transactions and automate trading processes, as DLT is becoming more actualized in the derivatives space.
As Cointelegraph previously reported, in 2018 the CFTC requested feedback on the cryptocurrency to better understand the technology behind the Ethereum blockchain and how it compares to Bitcoin (BTC).
Later the agency received more than 30 public comments, including some from blockchain consortium R3, the non-profit Ethereum Foundation, U.S. crypto exchanges Coinbase and ErisX, blockchain tech company ConsenSys, crypto finance company Circle and Weiss Cryptocurrency Ratings. Cointelegraph presented a summary of company’s responses to CFTC.
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