Daily Forex Market Preview, 01/03/2018
The British pound was seen trading weaker on the day after Brexit comments from the EU’s chief negotiator Michel Barnier. Barnier said that the pace of the Brexit negotiations had to pick up after the EU published a draft Brexit withdrawal agreement. This included no hard border between Ireland and Northern Ireland. The British PM Theresa May is expected to give a speech on Friday.
The U.S. dollar was also on the back foot on Wednesday as the revised GDP estimates for the fourth quarter showed that the U.S. economy grew at a pace of 2.5%, compared to the initial estimates of 2.6%. The decline in the GDP came on account of higher imports and reduced investment in private inventory.
Pending home sales report was also weaker after data from NAR showed a 4.7% decline on the month. This was the largest decline in nearly four years.
Looking ahead, the markets look to a new trading month. The economic calendar is busy as investors look to the ISM’s manufacturing PMI that stands out today. Forecasts point to a modest decline to 58.7, down from January’s 59.1. The UK manufacturing PMI is also expected today but the index is forecast to fall slightly to 55.1 from 55.3 in the previous month.
The Fed Chair, Jerome Powell will be giving his testimony once again to the U.S. Congress later today.
GBPUSD 01-03-2018 Intra-day analysis
GBPUSD (1.3748): The British pound fell sharply on the day with most of the declines coming from the Brexit negotiations and the comments from the relevant officials. On the 4-hour chart, price action extended the declines following the breakdown of the support level at 1.3902. This potentially puts the downside target in GBPUSD towards 1.2617 – 1.3600 level of support. A retest of support at this level could see GBPUSD establishing a new range, trading sideways within the support and the resistance levels. Any near term reversals could be seen pushing the currency pair back towards 1.3902 where resistance could be established.