As we already pointed out in the Admiral Markets Weekly Market Outlook on Monday, the US Dollar seems to have a solid bullish yearly close ahead of it, especially since the US midterm election dust has now settled, and the FED rate decision last Thursday didn’t provide any surprises in regards to a rate hike, or a significant switch in the rhetoric of their statement.
That being said, higher than expected inflation data from the US could function as another catalyst for bullish USD moves. The situation looks a little different for Pound Sterling: even though GDP data last Friday came in as expected, and triggered speculation around a tighter BoE monetary policy, chewing Brexit negotiations have pushed the GBP/USD currency pair back below 1.3000.
Source: Economic Events 14 November 2018 – Admiral Markets’ Forex Calendar
With that in mind, even with solid/higher than expected inflation data, GBP does not necessarily need to react strong on such news. Now the good news: it seems as if EU and UK negotiators have agreed on a text on how to avoid a hard border in Ireland, which potentially levels the path to a Brexit deal.
Technically speaking: GBP/USD may now take on further momentum on the upside, and then subsequently may mark new November highs with a break above 1.3180/3200. A push back towards and above 1.3300/3350 would further brighten the picture up in the GBP/USD currency pair, and further gains might become a real possibility as we move into the weekly close. If discussions around the Irish border fall apart again, and a Brexit deal still can’t be reached, another push lower, with the re-test of the region around 1.2670/2700 should be expected.
Source: Admiral Markets MT5 with MT5SE Add-on, Accessed: 13 November 2018, 11:00 PM CET
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