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Talking Points:

- This week’s economic calendar[1] has a heavy USD[2] and GBP[3] 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[4] 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).

- Are you looking to improve your trading approach? Check out Traits of Successful Traders[5]. And if you’re looking for an introductory primer to the Forex market, check out our New to FX Guide[6].

If you’re looking for short-term indicators on GBP/USD[7], check out our IG Client Sentiment Indicator[8].

British Pound Poses Bullish Breakout At Start of Big Week

This should be an important week for the British Pound[9]. 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[10]. The driver for that hawkish shift at the Bank of England has been inflation[11], 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

UK CPI Monthly Since February, 2017

Chart prepared by James Stanley[12]

The British Pound is catching a bid[13] 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[14] 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

gbpusd four hour chart

Chart prepared by James Stanley[15]

This helps to put the longer-term

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currensceneFLOGO WHTsquareThough not the oldest form of currency, some form of shell money appears to have been found on almost every continent. The shell most widely used worldwide as currency was the shell of Cypraea moneta, the money cowry.

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