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July 27, 2018

IronFX UK, Theresa May’s Brexit plan scrapped by the EU & ECB remains on hold

What’s happening in the market today? Check out the main economic events to follow the market!

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This article is originally referred from IronFX News.

ECB remains on hold, EUR/USD drops

The ECB remained on hold as was widely expected yesterday at 0.00% and the common currency reacted negatively against the USD.

As for the political takeaways, ECB’s president Draghi, stressed that the phrase “through the summer” means exactly that, zero-ing the chances for an earlier rate hike.

Another interesting point would be that the ECB seems comfortable with current market pricing of rate hikes, which could strengthen the arguments for a rate hike after the summer of 2019.

As for the financial side, recent financial data seem to be an expected correction for the ECB and nothing changes in ECB’s expectations, highlightening wages growth rate as a plus.

EUR/USD dropped yesterday testing the 1.1640 (S1) support line without breaking it.

We could see the pair experiencing some bearish tones as today’s financial releases may strengthen the USD side of the pair.

Should the bears take over the market we could see pair breaking the 1.1640 (S1) support line and aim if not break the 1.1580 (S2) support barrier.

Should the bulls take over the market we could see the pair aiming if not breaking the 1.1745 (R1) resistance line.

Theresa May’s Brexit plan scrapped by the EU

A number of basic elements of UK’s new Brexit plan were rejected by EU’s chief negotiator Michel Barnier.

The rejection was based on the principle that the EU “cannot and will not delegate” the collection of its taxes and duties to another country, hence rendering Theresa May’s plan as non-workable.

With time pressing for an agreement in October, EU’s Barnier and UK’s Raab repeated their determination to reach an agreement until then.

Hence, the Irish border issue remains a thorn in the negotiations and the choices for Theresa May narrow even further.

Should there be further headlines destabilizing the UK political scene or the Brexit negotiations we could see the pound weakening.

GBP/USD dropped yesterday, breaking the 1.3160 (R1) support line (now turned to resistance).

The pair may prove to be sensitive to any further headlines regarding Brexit as well as today’s financial releases which could strengthen the USD side.

Should the pair come under selling interest we could see it breaking the 1.3050 (S1) support line and aim for the 1.2960 (S2) support barrier.

On the other hand should the pair find fresh buying orders along its path we could see it breaking the 1.3160 (R1) resistance line.

In today’s other economic highlights:

In the American session from the US we get the preliminary GDP growth rate for Q2, which is forecasted to accelerate substantially and could provide some support for the USD.

Also, we get the US Core PCE prices for Q2, the final release of the Michigan Consumer Sentiment indicator for July and the Baker Hughes Oil Rig Count figure.

As for speakers, please note that FOMC member James Bullard speaks today.

Also we would like to point out that Bitcoin dropped yesterday probably on the news that a US Bitcoin ETF was rejected by the Securities and Exchange Committee.

Should you be curious about what the coming week has in store for us and the upcoming BoE interest rate decision, you can refer to the week ahead report later today.

Original Source: IronFX News

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