Macro observations

• Pressure seen ramping up on Sterling in the coming weeks as the latest Brexit poll puts ‘Leave’camp in the lead. The Pound fared badly out of last week. Nonetheless, UK economic data has  got better relative to expectations YTD, which puts Monday’s PMI Construction and indeed Tuesday’s Services PMI in focus for their potential to register a positive surprise.
• The USD has certainly weakened through March with a trend of steepening falling highs in the second half of the month. It nonetheless has support currently, keeping the 5-month sideways range in play ahead of this week’s March FOMC meeting minutes release, which could well confirm Yellen’s dovish stance and press on the broad based USD strength.
• The Euro has two key resistance hurdles to clear (1.1440, 1.1500) if it is to stage a breakout of its 12-month sideways channel. That looks unlikely this week if the technicals are to be believed – Daily RSI turned back from overbought, momentum diverging through March. We’d expect a correction from current levels at the very least, especially given the fairly unreasonable reaction to Mario Draghi’s last attempt at QE!

Key data this week (Sign up here to get our daily live macro-calendar)

UK

• Mon: PMI Construction
• Tue: BRC Sales Monitor; Services PMI
• Wed: BRC Shop Price Index; Halifax House Price Index
• Thur: –
• Fri: Balance of Trade; Industrial & Manufacturing Production

US

• Mon: Factory orders
• Tue: Services PMI; ISM Non-Manufacturing
• Wed: MBA Mortgage Applications
• Thur: Consumer Credit; Initial Jobless Claims
• Fri: Wholesales Inventories

EU (data for Eurozone unless otherwise stated)

• Mon: PPI
• Tue: Factory Orders (GER); PMI Services (GER); PMI Services (EU); Retail Sales (EU)
• Wed: Industrial Production (GER)
• Thur: –
• Fri: Balance of Trade (GER)

GBP/USD (‘Cable’)

GBP/USD (daily)

GBP/USD (hourly)

Technicals (based on daily price data unless otherwise stated)

• Cable is back below the 50-day MA after Janet Yellen was reassuringly Dovish last week
• Trading back at March rising lows
• Narrowing  pattern which could indicate consolidation and eventual continuation of preceding trend – i.e. down.

GBP/EUR

GBP/EUR (daily)   

GBP/EUR (hourly)

Technicals (based on daily price data unless otherwise stated)

• The GBP/EUR pair is trading back around late 2014 levels
• Stochastics & RSI are at or near oversold and pointing back up
• Negative momentum for much of 2016

EUR/USD

EUR/USD (daily)

EUR/USD (hourly)

Technicals (based on daily price data unless otherwise stated)

• End-March breakout above 1.135 hit resistance
• RSI & Stochastics turned back down fro overbought
• March Momentum divergence
• MACD Histogram divergence