Following Monday’s 200-pip gap to the downside, we can see that the pair partially recovered some of its losses yesterday, reaching highs of 1.2084 on the day. In Monday’s report, the desk commented on the likelihood that this instrument would find a ceiling between the lower edge of the weekly resistance area at 1.2082 and the psychological level 1.21. As anticipated, the marked sold off from this zone nicely, leaving a large part of the weekend gap unfilled, and now looks to be on course to retest the major psychological boundary 1.20.
British Prime Minister Theresa May is due to speak in London today about Brexit, which will, all being well, offer some direction regarding the UK’s position on a ‘hard-Brexit’. This leaves the GBP market in a precarious position as far as trading is concerned. Although mainstream see the pound declining further, choosing a direction today, in our book, would be a rough finger-in-the-wind-assessment.
Our suggestions: In light of upcoming events, we are humbly going to take a back seat today as it could be very messy!
Data points to consider: UK’s CPI reading set for release at 9.30am, British Prime Minister Theresa May is due to speak in London today (tentative). FOMC member Dudley speaks at 1.45pm, at 3pm GMT both Treasury Secretary Lew and FOMC member Brainard take the stage.