The British pound regained some positions after a major drop yesterday in the news about the postponement of the Brexit vote in the British Parliament.
Meanwhile today, British Prime Minister Theresa May went to negotiate with European leaders, on which she will try to convince them to make concessions under the terms of Brexit.
European Commission President Jean-Claude Juncker has already said that a guarantee of the absence of a rigid border in Ireland is necessary, and therefore there is no space left to review the deal. The only solution is to offer more clarity and interpretation of the Brexit transaction.
Let me remind you that the European court allowed the UK to remain in the EU customs zone indefinitely, which will eliminate the need for customs control. However, the Prime Minister of Great Britain considers this as a temporary solution, as he is rejected by hard supporters of Brexit. Secondly, it cannot please one, as well as, PM May, which slows down the signing of the agreement. Supporters of the break in relations with the EU are confident that the further presence of Great Britain in the customs union with the EU will limit the possibility of entering into new trade agreements and establish their own immigration and environmental regulations.
The UK has already announced that it is not going to revise the withdrawal agreement. The same attitude of officials to the political declaration, which was recently signed and which has no legal force.
The situation gets confused more and more.
Today's data on wage growth in the UK supported the British pound, which corrected after yesterday's fall in tandem with the US dollar but the labor market has failed to please investors.
According to a report, wages in the UK rose from August to October of this year. he report of the National Bureau of Statistics states that in the aforementioned period, the average earnings in the UK grew by 3.3% compared with the previous year, after growing by 3.1% from July to September.
As I noted above, the number of unemployed for the period from August to October. On the contrary, increased by 20,000 people and the unemployment rate rose to 4.1% from 4%. The number of applications for unemployment benefits in November increased by 11,800.
As for the technical picture of the GBP/USD pair, only a breakthrough of resistance in the 1.2620 area will be able to form a new wave of purchases along with the demolition of a number of stop orders, which will lead to an update of the maximum of 1.2675 and 1.2720. However, any negative news from Brexit will bring pound sellers back to the market. Therefore, it will not be entirely correct to expect a larger upward correction in the current conditions.
The European currency also recovered from yesterday's decline amid a positive report from the Economic Research Institute ZEW. According to the data, the index of economic expectations rose to -17.5 points in December against -24.1 points in November of this year. Economists predicted that the index will be -24.0 points. ZEW noted that the rise in the economic expectations index is a positive development, but it should not be given too much importance. The index of current conditions in Germany in December fell by 12.9 points, to 45.3 points.
As for the technical picture of the EUR/USD pair, buyers managed to stay above the level of 1.1355, which indicates the presence of large players in the market. The current situation allows us to build a lower border of the ascending channel and count on a breakthrough of resistance 1.1390 with further growth in the area of 1.1415 and 1.1450. In the event of a decline in the euro in the afternoon, amid a good report on producer prices in the United States, support can only be expected from the large range 1.1320-1.1310.
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
InstaForex analytical reviews will make you fully aware of market trends! Being an InstaForex client, you are provided with a large number of free services for efficient trading.