The week ahead will be abundant in reports from the United Kingdom and the United States. Number of macroeconomic reports will be complemented by the prolonging political and geopolitical tensions. Will we see the pound regaining its shine? Will the US dollar extend recovery? What new round of trade talks will bring? We shall know this week!
Readings scheduled for today:
9:30 am GMT - UK, GDP report for Q4 2018. Expected:
9:30 am GMT - UK, Industrial and manufacturing production for December
Central bank speakers scheduled for today:
2:00 pm GMT - ECB’s Knot
4:15 pm GMT - Fed’s Bowman
What to watch for the remainder of the week?
Data from the United Kingdom: GDP (Monday, 9:30 am GMT), inflation (Wednesday, 9:30 am GMT), retail sales (Friday, 9:30 am GMT)
The British pound was underperforming since the start of the previous week. Bank of England decision and the inflation report released along with it did little to support the UK currency. As the Bank of England lowered its forecasts and now sees just one rate hike over the next 3 years, the outlook for GBP remains bearish. Nevertheless, the currency will have a chance to regain its shine this week thanks to a streak of crucial macroeconomic releases. The marathon will start on Monday with GDP report for the final quarter of 2018. Affected markets: EURGBP, UK100.
Data from the United States: inflation (Wednesday, 1:30 pm GMT), retail sales (Friday, 1:30 pm GMT), UoM surveys (Friday, 3:00 pm GMT)
The Federal Reserve reiterated previous message during its January’s meeting and said that more attention will be now paid to the incoming data. The upcoming week will host a number of releases, including delayed retail sales for December. However, the biggest attention will be paid to the inflation report that is due on Wednesday. Lacklustre price growth in the past few months effectively smashed odds for a hawkish turn at the Federal Reserve. Affected markets: USDIDX, TNOTE.
Geopolitics: trade talks in Beijing, US Government funding deadline (Friday), Brexit vote (Thursday)
The upcoming week will be another one that is abundant in key political and geopolitical events. Another round of the US-China trades talks will be held in Beijing with the US team being led by the Treasury Secretary, Steven Mnuchin. While the negotiators are said to be making a progress the word on the street suggests that there is still a long way to go. Moreover, Donald Trump announced that he won’t meet with the Chinese President Xi Jinping this month causing expectations of striking a deal in February to fade away. Temporary funding for the US government will run out on Friday therefore if no bipartisan solution to the Border Wall issue is found by then, the US government is likely to be shut once again. Last but not least, another Brexit vote will be held on Thursday. This time the UK lawmakers will vote on alternatives to the Brexit deal proposed by the PM May. Affected markets: GBPUSD, AUDUSD.
GBPUSD somewhat halted downward move in the vicinity of the 200-session moving average (purple line on the chart above). The pair failed to distance away from the aforementioned moving average for the past few days. However, the situation may changed today as the UK data pack set for release at 9:30 am GMT may provide pair with a meaningful price impulse. Source: xStation5