PM May refused to set date as a deadline on Brexit due to previous failures to reach it. This could be an indication that now, they are willing to turn every stone in their way to find the solution before the extension is over. She also left a No deal Brexit scenario on the table as it could be enforced on the UK (by the EU) if it keeps postponing for a final Brexit deal. Is this a turnaround towards a final solution? May also stated there is common ground between the Labour party and the government on the issue of customs. In our opinion, Therese May and the Labour party agree that some relationship with the EU maybe required to keep job protection and business development in line. Even though the BOE interest rate decision today could be overshadowed by the delayed Brexit, the UK economy seems to be in fairly good hands due to increasing inflation and a tight labour market. Cable got some support yesterday but corrected lower later in the late US session. Cable has been able to advance in the previous days coming back from a two month downfall it had gradually performed since March. In a bullish momentum we may see the pair break above the 1.3070 resistance level and aim higher for the (R2) 1.3175 or even the (R3) 1.3235 resistance hurdles. Of course a break above the (R2) 1.3175 resistance line could signify cable has excessive upward strength since this level has not been surpassed since late March. In the opposite direction, if the pair is to come under selling interest we may see it drop below our (S1) 1.2980 support level. Even lower we could find the (S2) 1.2875 support level with the (S3) 1.2800 support hurdle being even lower.Fundamentally, GBP could keep moving higher if the UK displays some unity within the parliament.
FED remains cautious while US Sino talks remain productive
The FOMC reaffirmed its stance on Wednesday confirming they will remain in this position as they did not see any reason to take action in either direction. The USD gained some strength upon release of the statement. The Fed based their opinion on solid financial growth and a tight labour market while they also believe inflation could return to higher levels. On another front, various reports indicate the United States and China are nearing a trade deal. Chinese officials admitted that an enforcement mechanism is vital, yet they said it should apply for both sides. The talks in Beijing in the previous days where characterized as productive and will continue in Washington next week were analysts believe announcements could be made. XAUUSD edged lower yesterday due the strengthening of the USD upon the FOMC meeting. We must note Gold prices moved higher in the previous sessions surpassing our (R1) 1280.00 resistance line and even tried the (R2) 1287.00 resistance level but was unsuccessful of moving higher. However, an upward movement reaching our (R3) 1294.00 resistance line could indicate a change of the current bearish momentum the precious metal is undergoing. If the selling interest persists we may see the metal moving below the (S1) 1271.50 support level and aim even lower for the (S2) 1260.00 support line. Furthermore, from our point of view the positivity coming from the US Sino talks is easing risks and money from Gold could be moved to other instruments that can generate profits faster.
Other economic highlights, today and early tomorrow
In the European morning, we get from the Eurozone the German Manufacturing PMI and the Eurozone’s Manufacturing PMI both for April. During the European midday session, we get the BoE Interest Rate Decision and at the same time the CNB Interest Rate decision from the Czech Republic. Later on in the US session we get the Factory Orders (MoM) for March. As for speakers please note that German Buba President Weidmann and ECB’s Praet Speaks in the late US session.
GBP/USD H4
Support: 1.2980 (S1), 1.2875 (S2), 1.2800 (S3)
Resistance: 1.3070 (R1), 1.3175 (R2), 1.3235 (R3)
XAU/USD H4
Support: 1271.50 (S1), 1260.00 (S2), 1244.70 (S3)
Resistance: 1280.00 (R1), 1287.00 (R2), 1294.00 (R3)
