Last week’s UK publication of manufacturing, construction and services PMIs have all posted stronger than expected results. After BREXIT, UK’s economy holding up well led by sterling weakness.
Deutsche Bank Markets Research reported, investors extended GBP net shorts considerably and EUR net shorts marginally.
Sky news-In her first TV interview of the year, Mrs May said she will set out her plans for Brexit over the coming weeks but has given her strongest hint yet that the UK will leave the single market.
- UK Manufacturing PMI posts 56.1 in December. Manufacturing PMI at 30-month high as growth of output and new orders strengthen.
- UK Construction PMI reported at 54.2 in December, up from 52.8 in November.New order growth hits 11-month high in December.
- The UK service sector index rose for the third consecutive month to 56.2, from 55.2, signalling the fastest expansion since July 2015
- 11 January (Wednesday)-UK trade data for November due. This could offer an insight as to whether GBP is having an impact of export volumes.
- Manufacturing production scheduled Forecast 0.6% vs -0.9%
- Industrial production forecast forecast 0.8% vs -1.3%
- Turning to Euro, ECB Monetary Policy Meeting minutes (Thursday) are the highlights this week. Investors/Traders will look for further detail on the motivation for recent policy changes, as well as views from the Governing Council on the core inflation outlook.
Rabobank reported, The recently published annual FT survey of economists has found that the majority are just as pessimistic about Brexit’s likely effect on the UK’s longer-term economic prospects as they were a year ago.
It’s time to focus back to BREXIT. There are now only weeks to go before the March threshold in which PM May intends to sign Article 50 of the Lisbon Treaty and kick-start the process of leaving the EU.
- Feb/Mar-2017: publication of UK’s Brexit plan
- Mar-2017: Art. 50, formal exit notification
Societe Generale reported, Talk is mounting of the need for, and possibility of, a transitional deal being struck.
The cross extends the overnight gains on Tuesday’s Asia trade high made at 0.8720 at the time of preparing the article. The price settles above all the moving averages but the daily RSI indicates 72.
Resistance: 0.8725/0.8740, 0.88 and 0.8880.
Support: 0.8670, 0.86 and 0.8500
The hourly and daily RSI indicating an overbought signal, upside might be limited. Traders can wait for a dip to buy. Supply zone remains at 0.8725, 0.8770 and 0.8815.