Last week finished on a high and that has continued into this week with most indices looking to press higher to welcome in the new trading week, with the exception however, of the UK’s FTSE. Probably not surprising given the host of weak data we saw from the UK’s economic prints on Friday and the general weaker sentiment that continues to hang over Brexit. The USD was slightly weaker, while US markets soared higher with the NASDAQ up almost 2 %, while the S&P closed up over 1.5%, following a far stronger NFP print headline print, but a weaker wage growth level than was expected. The trade war/tariff debate will be ongoing. The euro was weaker on Friday, some continuation through from Thursday’s dovish sentiment and Draghi’s reassurance that QE will continue until inflation picks up, and that rates will remain low long after QE has ended.
That leaves us looking at potential for market moves this week and we are sure to have plenty. Politically we’ll obviously have a very keen focus on Brexit progress, or lack of. There will of course always be one eye focused stateside as the prospect of trade war heats up. There is nothing on the lineup today and the European docket itself is pretty clear until Wednesday when the ECB’s president Draghi, Praet, and Vice President Constancio all speak at various times through Wednesday morning while inflation data is due on Friday. They will be the key days for the euro and should the ECB speakers continue to speak about continued support, then the euro may well face additional selling, while weaker than expected inflation may well see the euro under more pressure into the end of the week. Euro will likely find sellers on any move above 1.2400 area, while major resistance to any move higher will be at 1.2500/50. Larger range for EURGBP continues to be .8980 to .8730, we’ve seen spike either side on break but nothing sustained and thus that major range remains in play. .8880 provides some intraday support with resistance towards .8927.
Nothing major for the UK in terms of data this week but that matters little. Focus will be on Brexit news flow and that’s really all that matters for GBP. Stateside CPI inflation and retails sales data Tuesday/Wednesday respectively will be the pick of the major data points. GBPUSD looking at support around 1.3700, while resistance to the upside should see rallies above 1.3900 running into sellers.