The British pound collapsed against the US dollar after it became known that the Brexit deal could be disrupted. Let me remind you that quite recently, British Prime Minister May asked to postpone Brexit until June 30. Yesterday, there was news that European leaders were ready to meet the request of the British Prime Minister Theresa May and postpone Brexit but only for seven weeks on a condition that the Brexit deal would be approved by the British Parliament by that time. Now, the UK has time to exit until May 22.
According to the EU, if the British Parliament did not approve the Brexit agreement by April 12, the risk of withdrawing without a deal would increase significantly.
The next step of the British Prime Minister Theresa May will be the appointment of a new vote in parliament, which is likely to be held next week. However, the House of Commons is unlikely to make concessions only under the pressure of the indiscriminate exit of the country from the EU. This scenario further increases uncertainty.
As for the technical picture of the GBP/USD pair, the volatility will remain quite high. A breakthrough on the support of 1.3120 will lead to a new wave of short positions with a return to the weekly minimums of 1.3000 and 1.2920. Under the scenarios of further growth, large resistance levels will be viewed around 1.3225 and 1.3270.
Yesterday's fundamental data on the American economy supported the US dollar.
According to a report by the US Department of Labor, the number of initial claims for unemployment benefits fell by 9,000 to 221,000 in the week from March 10 to March 16. Economists expected the number of applications to be 225,000. The number of secondary applications in the week from 3 to 9 March decreased by 27,000 to 1,750,000.
Production activity in the area of responsibility of the Federal Reserve Bank of Philadelphia has recovered substantially, which is a good sign. The increase was due to an increase in new orders and shipments.
Based on the report, the Philadelphia Fed Manufacturing Index rose to 13.7 points in March 2019 against -4.1 in February 2019. Economists had expected the index to be 5 points in March. The index of new orders in March was 1.9 points, while the index of shipments increased to 25 points.
According to the Conference Board, the leading indicators index in February 2019 also showed an increase of 0.2% compared with the previous month and amounted to 111.5 points. Economists have been waiting for the growth of the index by 0.1%.
While Beijing and the United States are conducting trade negotiations and have reached the "finish line," US President Donald Trump once again stressed that duties on Chinese goods will remain in place for a substantial period even after an agreement has been reached. Such an approach will be maintained until the White House is convinced that the deal with China will bring its results and Beijing fulfills all its conditions. Let me remind you that representatives of the two countries have been discussing the issue of the phased cancellation of fees for quite a long time.
As for the technical picture of the EUR/USD pair, growth is limited by the intermediate resistance of 1.1400, however larger levels are seen in the range of 1.1430 -1.1450. In case of a decline in the trading instrument, it is best to return to long positions from the support of 1.1330 and 1.1300.
The material has been provided by InstaForex Company - www.instaforex.com