Will BREXIT take place or is the GBP doomed?
Over the past week, the heads of central banks continue to speak, and make cautious statements on plans for normalizing monetary policy in their countries. However, market participants appear not to find anything new in the texts of their statements, and the markets continue to consolidate within the framework of small technical movements.
Today will be the next speech of ECB President Mario Draghi. Most likely, this speech will do without surprises, and the financial markets will continue their sluggish movements.
The situation with statistics, which will be published in the UK, is different. At 08-30 GMT, market participants will receive the latest data on changing the number of applications for unemployment benefits, and the overall unemployment rate. These indicators have a huge impact on the decision of the Bank of England in regards to monetary policy, and this is not the whole intrigue of today's statistics.
It is very important to see and understand how market participants will react to the publication of statistical data. To some extent, based on how the market participants behave when receiving the data, it will be possible to draw conclusions on how the exchange speculators will continue to react in the worst-case scenario for the British currency, namely, the failure of negotiations on BREXIT.
If, with unfavorable statistics, market participants witness a powerful downward movement, then if the UK exit plan fails, then the British currency may be weakened significantly to 1.20 on the GBP/USD pair. Coupled with the deteriorating statistics, the Bank of England will be forced to leave the interest rate unchanged, which additionally will give weakness to the British currency.
As a result, you should closely monitor the response to statistical data in order to be able to properly arrange a disposition in the British currency.
In the United States, figures are released on the volume of construction permits on an annual basis. These figures are expected to be good, and this is a kind of leading indicator that can give strength to the US dollar, which will put pressure on other major currencies.
Data on crude oil reserves from the Ministry of Energy, in the event of a forecast of negative numbers, in the current situation will support oil prices, and as noted in previous reviews. At present, all prerequisites exist for the continued growth of oil prices, and such statistics will give confidence to market speculators, which bank on the growth of oil prices.
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