British pound wavers after fruitless Boris-Leyen meeting
The British pound is little changed as traders reacted to last night’s meeting between Boris Johnson and Ursula von der Leyen. The meeting revealed key differences between the two sides, which increased the possibility of a no-deal Brexit. The two then gave the negotiators four more days to come up with an agreement. Therefore, focus now turns to Sunday, which is now the effective deadline. Looking at the economic calendar, the only key event will be UK’s GDP and trade numbers that will come out in the morning session.
The euro is relatively unchanged ahead of the important interest rate decision by the European Central Bank. Economists expect the bank to leave the deposit facility rate and the marginal lending rate unchanged at -0.50% and 0.25%, respectively. They also expect the central bank to increase its quantitative easing program by between 400 billion and 500 billion euros. This decision comes at a time when many European countries are about to roll out large Covid vaccinations.
The economic calendar will have several important events later today. From Europe, we will get the Swedish consumer price index data. These numbers are expected to show that the headline CPI rose at an annualised rate of 0.2% in November, which is relatively lower than the previous month’s increase of 0.3%. From the United States, the Bureau of Statistics will also release the official consumer price index (CPI) data. Finally, from Canada, the deputy central bank governor will have a press conference, where he will talk a bit about yesterday’s decision.
The EUR/USD is in a tight range today. It is trading at 1.2080, which is important support considering it was the lowest level on Monday. On the hourly chart, the price is a few pips below the 25-hour and 15-hour moving averages while the Average True Range (ATR) has started to drop. It seems like the pair is forming a bearish flag pattern. Therefore, the potential scenario is where the pair breaks out lower and possibly targets 1.2000.
The GBP/USD is trading at 1.3373 which is close to where it was yesterday. It is slightly below Tuesday’s high of 1.3475 and slightly above yesterday’s high of 1.3313. On the hourly chart, the pair is slightly below the 25-day and 15-day moving averages while the signal line of the MACD has moved below zero. The pair will possibly remain at the current range as traders wait for a definitive answer to Brexit.
The USD/CAD pair is little changed and currently trading at 1.2808, which is slightly above the week’s triple bottom at 1.2766. It is also slightly above the lowest level since April 2018. On the four-hour chart, the pair is below the 15-day and 25-day exponential moving averages while the RSI has risen above the overbought level of 30. The pair will likely remain at the current range today.