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Monday, March 20, 2017

Today's Spotlight Market

UK Prime Minister Theresa May has announced that she will trigger Article 50 on Wednesday, March 29. Last week, after a spirited debate in Parliament, the Notification of EU Withdrawal bill was passed without amendment and given royal assent by Queen Elizabeth II, setting the stage for Mrs. May to begin the two year negation period for the United Kingdom to leave the European Union.

Fundamentals

EU withdrawal is one of several issues which may influence the British Pound. Last week, Scottish First Minister Nicola Sturgeon called for a second referendum on independence from the United Kingdom as she is strongly opposed to EU withdrawal. The Monetary Policy Committee of the Bank of England also met last week and voted to leave interest rates unchanged. However, this was not a unanimous decision as the threat of increasing inflation is causing some members to believe a rate hike may be needed. The next release of the Consumer Prices Index is scheduled for tomorrow. Other upcoming economic data includes business conditions on Wednesday and retail sales on Thursday.

Technical Notes

Turning to the 3-month continuation chart for the British Pound, we see a reversal of the bearish trend in late February. Resistance was first broken at the 20-day SMA and then broken again at the 50-day SMA. 14-day RSI, at 54.14, is neutral.

Dale Jennings, Commodity Analyst