The British pound began to gradually decline against the US dollar after appearing on the market that British authorities did not intend to ask the EU for a long postponement of Brexit. This was announced by government representatives.
The short period of delay will not allow the Prime Minister of the United Kingdom to get the EU to make important changes to the Brexit agreement, which is so expected in parliament. Moreover, a short delay calls, in general, the Brexit procedure itself and the UK's exit from the EU, since in fact, nothing will change in such a short time, except for the next period of uncertainty, which lasts for about 3 years.
Already in the afternoon, it became known that the government of the country sent an official petition to the EU leaders to postpone the exit of Great Britain from the union to the date after March 29. During her speech, British Prime Minister Theresa May said she was asking to postpone the official date of Brexit to June 30 and ratify additional documents so that a new vote could be taken on Brexit. However, the duration of the delay will be determined by the EU authorities. Most likely, this will happen tomorrow during the summit.
Tomorrow, the decision of the Bank of England on interest rates will be published.
Given the excitement around Brexit, traders ignored today's inflation data in the UK, which accelerated slightly in February of this year. This happened due to rising prices for food and alcoholic beverages.
According to a report by the National Bureau of Statistics, in February 2019, compared with the same period last year, consumer prices rose 1.9% after rising 1.8% in January. With regard to growth in February, compared with January of this year, inflation increased by 0.5%, while economists expected it to grow by 0.4%.
Let me remind you that quite recently, the Bank of England has signaled that it can continue to raise rates in the next few years in order to keep annual inflation near the target level of 2%. I think it is at this point that you should pay attention to the statements that will be published tomorrow, along with the decision on interest rates. It is unlikely that a small jump in inflation will frighten the regulator.
In the first half of the day, a report was also published, which indicated that in January of this year, as compared with January of last year, housing prices in London decreased by 1.6%.
As for the technical picture of the GBPUSD pair, a breakthrough of a sufficiently dense support area led to the sale of the pound. At the moment, the pressure of bears can be kept in the region of minimum 1.3130, while larger support can be seen in the area of 1.3020. However, we can already say that the current short-term uptrend for the pound is broken, however, as I mentioned above, much will depend on tomorrow's decision at the EU summit.
Fed and interest rate
In the afternoon, all attention will be focused on the decision of the US Federal Reserve on interest rates. No one doubts that the regulator will leave them unchanged, but the forecast for their further increase may be significantly revised. If the Fed refuses to tighten monetary policy this year, this could lead to a significant weakening of the US dollar, as previously, at least two rate hikes were raised.
As for the technical picture of the EURUSD pair, it remained unchanged. Another unsuccessful attempt to update yesterday's high led to a slowdown in euro growth and a decline. The goal remains the support of 1.1335, the breakthrough of which will lead to a larger sale to the minima of 1.1300 and 1.1250. In the case of growth above the resistance of 1.1370, the demand for the euro will significantly increase, which will open a direct road to the highs of 1.1410 and 1.1490, however, such a large increase will occur only with real changes in the monetary policy of the United States, which we will learn in the afternoon.
The material has been provided by InstaForex Company - www.instaforex.com
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