Sterling remained closer to the two-week low as investors continue to worry about the probability of a no-deal Brexit. This week, the European Union has warned about the increasing chances of having a no deal arrangement. Today, investors will focus on the Bank of England (BOE), which will release the interest rates decision. The bank is expected to leave interest rates unchanged at 0.75%. Traders will keep a close eye on the bank’s view of Brexit and outlook for the year.
The kiwi declined today after weak employment numbers. The unemployment rate for New Zealand increased to 4.3%, which was higher than the expected 4.1%. In January, the unemployment rate announced was 3.9%. The participation rate declined to 70.90% from 71.10% for the third quarter. The participation rate shows the number of people who are working, willing to work, and are actively looking for work. The employment change for the fourth quarter increased by 0.1%, which was lower than the expected 0.3%. The labor cost index for the quarter increased by 0.5%, which was lower than the consensus estimate of 0.6%.
It will be another important day for the euro as investors expect key data from the region. In the morning, the region will release the economic forecast. This forecast comes as recent data has shown increased weakness in the region. Today, the German industrial production is expected to grow by 0.7% after contracting by -1.9% in November. Exports are expected to contract by minus 0.3%. In France, the trade deficit is expected to improve slightly to $4 billion. Italian retail sales look to remain unchanged.
EUR/USD
The EUR/USD pair continued to decline and is currently trading at 1.13600, which is between the 23.6% and 38.2% Fibonacci Retracement level. The pair is below the short and long-term moving averages, while the momentum indicator has remained below the 100 level. The pair will likely continue moving lower today to test the 23.6% Fibonacci level of 1.1340.
GBP/USD
The GBP/USD pair declined and is currently trading at 1.2930, which is slightly above the 23.6% Fibonacci Retracement level. The pair is below the 25-day and 50-day EMA while the RSI has remained above the oversold level of 30. The Parabolic SAR and the ADX are showing that the pair could continue to decline. There is a likelihood that the pair will continue declining to the 1.2900 level, which is an important psychological level.
NZD/USD
The NZD/USD pair declined sharply after the weaker jobs numbers. The pair reached an intraday low of 0.6747, which was the lowest level since 25th January. This price is below the 25-day and 50-day EMAs, while the RSI has declined to 19, which is an oversold level. The same is true with the money flow index, which has declined to the oversold level. The pair will likely continue to move lower as investors start to consider the increasing chances of a rate cut.
