Summary:
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Production data from the UK to be released in the morning
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Crucial Brexit vote to be held in the UK parliament on Tuesday
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ECB meeting and US inflation reading may spur volatility on EURUSD
The Brexit deal has been signed in Brussels but it means nothing as the UK Parliament still needs to approve it and there are prevailing expectations that it will not do that. The vote can have massive consequences for the British pound. This will be also an important week for the EURUSD as we have both the ECB meeting and the US inflation.
Readings scheduled for Monday:
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9:30 am GMT - UK, Industrial Production for October. Expected: -0.2% YoY, previous: 0% YoY
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9:30 am GMT - UK, Manufacturing Production for October. Expected: 0% YoY, previous: 0.5% YoY
Central bank speakers scheduled for today:
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12:30 pm GMT - ECB’s Angeloni
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6:00 pm GMT - BoC’s Lane
What to watch for the remainder of the week?
UK parliament votes on the Brexit deal (Tuesday)
All signs suggest that the UK Prime Minister Theresa May is short on votes ahead of the key parliament decision that will be taken this Tuesday. As much as investors would generally want to see the UK stay in the EU, at this point they’d just want to finally have Brexit off the table of major risks. So a failure to approve the deal will not be liked as there’s no clear next step that may be taken. Some expect May to resign, the opposition will seek snap elections and even the idea of the second Brexit referendum has been floated. Affected markets: GBPUSD, UK100.
The ECB decision (Thursday, 12:45pm BST, conference 1:30 pm BST)
The ECB looks locked to end the QE program at the end of December but it certainly would like to see the economy stronger at this point. There have already been rumours that the Bank considers measures that could provide some kind of relief to the lackluster economy after the program is terminated. Investors will focus now on interest rate expectations. Initially, autumn of 2019 has been considered appropriate for the first interest rate hike but now this is more and more in doubt. Affected markets: EURUSD, DE30.
US CPI inflation data (Wednesday, 1:30pm BST)
Although the Fed looks set to increase interest rates this month, some start questioning its willingness to move rates even once next year. The FOMC members have already suggested that a low inflationary pressure offered a comfort of being patient. From that perspective the CPI data for November should be important especially as lower oil prices should be already visible in the report. Affected markets: GOLD, USDJPY.
GBPUSD was slowly moving lower during the past two weeks. The pair reached its relevant support zone around 1.2700 handle. While for now it seems that bulls managed to defened the aforementioned technical hurdle, much can change following tomorrow's vote in the UK parliament. Source: xStation5
