Theresa May flatly rejected the
European Union’s conditions, calling the proposal unacceptable and one which
“undermines the constitutional integrity of the UK”. With EU’s chief Brexit
negotiator, Michel Barnier, stating
that a transitional deal was not guaranteed, fears are likely to heighten over
a possible Brexit “no deal” scenario. Sterling could be in store for further
punishment moving forward, as the renewed Brexit jitters continue to weigh
heavily on sentiment.
Some
attention may be directed towards the UK manufacturing PMI report this morning,
which is expected to print at 55.1 in February. While a figure that exceeds
market expectations could offer the Pound some minor support, the currency is
likely to remain more concerned with Brexit developments.
Taking
a look at the technical picture, the GBPUSD is under intense selling pressure
on the daily charts. The breakdown and daily close below 1.3850 could invite a
decline towards 1.3750 and 1.3670, respectively.
Dollar higher ahead
of Powell's second testimony
The
Dollar held its ground against a basket of major currencies on Thursday morning
ahead of the second session of Federal Reserve Chairman Jerome Powell’s
testimony later in the day.
Hawkish
comments from Powell have fuelled market speculation of the Federal Reserve
raising US interest rates four times this year – ultimately supporting the
Dollar. Market expectations of higher US rates could intensify further if the
new Fed head doubles down on hawkish comments made earlier in the week.
Taking
a look at the technical picture, the Dollar Index is bullish on the daily
timeframe. Prices are approaching the 50 Simple Moving Average while the MACD
trades to the upside. A daily close above the 90.55 level could encourage a
further incline higher towards 91.00.
Currency
spotlight – EURUSD
The Euro
weakened against the Dollar on Wednesday, following reports of Eurozone
inflation slowing to a 14-month low at 1.2% in February.
Euro
bears received further inspiration in the form of political uncertainty, thanks
to the looming Italian national election on Sunday. With the Dollar boosted by
heightened expectations of higher US interest rates, the EURUSD found itself
under heavy selling pressure. From a technical standpoint, the EURUSD is
turning increasingly bearish on the daily charts. Prices are trading below the
50 Simple Moving Average while the MACD has crossed to the downside. A
breakdown and daily close below the 1.2180 level could invite a decline towards
1.2090.
Commodity
spotlight – WTI Oil
WTI
Crude collapsed like a house of cards yesterday, after crude and gasoline
inventories in the United States rose more than expected.
It is
becoming clear that the story defining oil’s depressed price action continues
to revolve around ongoing concerns over rising US Shale production. While some
may continue to argue that oil prices remain supported by OPEC production cuts,
US shale remains a threat to higher oil prices. Focusing on the technical
picture, WTI Crude is under pressure on the daily charts. Sustained weakness
below $62 could encourage a decline lower towards $60.00.
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