- This week’s economic calendar has a heavy USD and GBP focus, with rate decisions out of each representative Central Bank to go along with a release of UK inflation numbers from the month of February. Ahead of those items, GBP/USD is putting in a bullish breakout on news of an agreement between the EU and UK on a Brexit transition deal.
- Wednesday brings new Fed Chair Jerome Powell’s first rate decision atop the bank, and markets are currently holding a 94.4% chance of a hike at that meeting. The bigger question is the rest of the year, as current probabilities are pointing to a 33.9% chance of four hikes (100 bps) from the Fed this year, and a 74.2% chance of three hikes (75 bps).
British Pound Poses Bullish Breakout At Start of Big Week
This should be an important week for the British Pound. Tomorrow morning brings inflation numbers for the month of February and then on Thursday we get the Bank of England for a rate decision. With this being a non-Super Thursday rate announcement, expectations are very low for any actual moves. More pressing will be the bank’s tolerance for a rate hikes later in the year after the hawkish twist that was seen in February. The driver for that hawkish shift at the Bank of England has been inflation, and this continues above the 3% figure that’s more than 50% away from the BoE’s own target of 2%; and it’s been that way for five consecutive months now.
UK Inflation Remains Elevated Above the BoE’s Target; February Inflation Due on Tuesday
The British Pound is catching a bid ahead of tomorrow’s inflation release, with GBP/USD being driven by some optimistic news on the Brexit-front. News of an agreement on a Brexit transition deal have helped to prod-prices higher in GBP/USD. Prices had previously posed a bullish breakout from a bearish trend-line last week, helping to further build-in to a shorter-term bullish channel in the process. Price action caught a bit of support on the projection of that bearish trend-line on Friday, and have since rallied above channel resistance.
GBP/USD Four-Hour Chart: From One Trend-Line to Another, Bullish Channel Building
This helps to put the longer-term