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A potential GBPUSD Setup, 2 weeks before next monetary meeting

Tuesday, April 16, 2019 1:43 PM GMT

Positioning in GBP pairs has been hard since the summer of 2018, as we were approaching the March Brexit deadline. Now that the EU has granted a flexible extension until the end of October 2019, the focus should turn to UK’s economy which is performing decently, instead of the unpredictable comments from politicians, that were previously moving the market.

We are 2 weeks away from the next monetary meeting on the 2nd of May and all scenarios are open. Α probable rewarding selling opportunity could be presented at the resistance zone.

Strengths:

  • BOE is the only central bank that continues to communicate that inflationary pressures exist and that an ongoing tightening of monetary policy at a gradual and limited extent is appropriate. Indeed, latest inflation readings increased and expected to record higher numbers at tomorrow’s releases, and today’s average earnings and unemployment rate readings are confirming the BOE’s scenario.
  • improving macro releases: GDP, unemployment, M4, industrial production, construction PMI (but below 50), Manufacturing PMI, average earnings and wages, trade balance

Weaknesses:

  • a downward revision of GDP growth in 2019 from the IMF. (from 1.50% in January, to 1.20% now. Note that the projection assumes that there will be an orderly Brexit within 2019.
  • deteriorating macro releases: retail sales (and expected to disappoint on Thursday’s release), consumer's confidence, current account, Business Investments, Service PMI (below 50 and falling), construction output, manufacturing production, industrial order expectations, high street lending, lending to individuals, home prices

Today’s speech of Governor Carney, at the Network for Growing the Financial System Conference, in Paris is not expected to produce news.

 

Disclaimer

The views expressed do not constitute investment or any other advice/recommendation/suggestion and are subject to change.
Reliance upon information in this material is at the sole discretion of the reader.
Opinions expressed in the report do not represent the opinion of Zulutrade and do not constitute an offer or invitation to anyone to invest or trade.

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