The UK parliament is to have another vote today (17:00, GMT) about Brexit, yet much of the steam was taken away as Theresa May addressed Parliament on Tuesday and announced another vote on the 27th of the month. The parliament is expected to reiterate its support for the approach to leave the EU as expressed on the 29th of January. The motion could run into some trouble with hard Brexiteers, as it excludes the possibility of a no deal Brexit, yet it is expected to pass. On the amendments part, no amendment is expected today to delay Brexit, yet Jeremy Corbyn may table an amendment to define in writing the date proposed be Theresa May for another meaningful vote. Other amendments could also be tabled, including some about what kind of Brexit the Parliament prefers, cancel Brexit, publishing the economic briefing in case of a hard Brexit and a second referendum, yet with little chance of passing. Other amendments could also be tabled, including some about what kind of Brexit the Parliament prefers, cancel Brexit, publishing the economic briefing in case of a hard Brexit and a second referendum, yet with little chance of passing. Cable dropped yesterday testing the 1.2830 (S1) support level. As the pair broke the downward trendline incepted since the end of January, we switch our bearish outlook in favor of a sideways movement. The pair could present some bearish tendencies today, as the US financial data could favor the USD part of the pair and volatility could rise during the vote of the UK parliament. Should the bears dictate the pair’s direction, we could see cable breaking the 1.2830 (S1) and aim for the 1.2710 (S2) support level. Should the bulls have the upper hand on the pair’s direction, we could see it breaking the 1.2960 (R1) resistance line and aim for higher grounds.
USD strengthens and Euro weakens on financial data.
The USD strengthened yesterday as inflation for January, decelerated yet remained above estimations. Analysts point out that the data didn’t rule out the possibility of the Fed hiking once near the end of the year, hence provided support for the USD. On the other side of the Atlantic, the EUR weakened as industrial output growth rate for December was lower than expected worrying investors. Worries were increased as Spain’s parliament rejected the draft 2019 budget and political uncertainty for one of the bloc’s largest participants settles in, without ruling out the possibility of new elections. We see the case for financial data to influence today’s direction for both currencies and we could see volatility rise. EUR/USD dropped yesterday breaking the 1.1300 (R1) support line (now turned to resistance) and bounced on the 1.1260 (S1) support line. We could see the pair trading in a bearish market today should the financial releases weaken the EUR and strengthen the USD side of the pair. Should the pair come under selling interest of the market, we could see the pair breaking the 1.1260 (S1) support line and aim for the 1.1215 (S2) support level. Should on the other hand the pair find fresh buying orders along its path, we could see it breaking the 1.1300 (R1) resistance line and aim for the 1.1345 (R2) resistance level.
Today’s other economic highlights
In today’s European session, we get from Germany and the Eurozone the preliminary GDP growth rate for Q4. In the American session, we get from the US the PPI growth rate for January and the retail sales growth rate for December, while from Canada we get the manufacturing sales growth rate for December. As for speakers, BoE’s Vlieghe and Philadelphia Fed President Harker speak.
GBP/USD H4
Support: 1.2830 (S1), 1.2710 (S2), 1.2600 (S3)
Resistance: 1.2960 (R1), 1.3070 (R2), 1.3175 (R3)
EUR/USD H4
Support: 1.1260 (S1), 1.1215 (S2), 1.1265 (S3)
Resistance: 1.1300 (R1), 1.1345 (R2), 1.1385 (R3)
