British pound volatility surges as Brexit uncertainty grips currency markets
The British pound became increasingly volatile on the foreign exchange market this week, as UK lawmakers took part in a series of crucial Brexit votes in UK Parliament. British Prime Minter Theresa May once again failed to pass her Brexit bill through UK Parliament this week, heightening uncertainty about the United Kingdom’s departure from the European Union. UK lawmakers also voted to avoid a Brexit no-deal scenario, sending the British Pound to a fresh 2019 trading high against the US dollar. Market volatility remained, as traders faced the prospect of extending Article 50 or accepting an amended Brexit deal from British PM Theresa May.
- The GBPUSD pair is bullish while trading above the 1.3300 level, key resistance is found at the 1.3388 and 1.3485 levels.
- If the EURUSD pair trades below the 1.3300 level, key support is found at the 1.3100 and 1.2955 levels.
Euro bulls return
The euro currency staged a strong recovery against the US dollar this week after the United States economy posted a series of weaker than expected data points. The EURUSD pair advanced above the 1.1300 level as both US CPI and PPI inflation measures came in weaker than estimated. US Retail Sales data also remained muted, while the large drop in December Retail Sales was not upwardly revised as widely expected. Investors also shrugged-off much weaker than expected German economic data, with German Industrial Production and CPI inflation widely missing market expectations.
- The EURUSD pair is bullish while trading above the 1.1290 level, key resistance is found at the 1.1360 and 1.1400 levels.
- If the EURUSD pair trades below the 1.1260 level, sellers may test towards the 1.1200 and 1.1170 support levels.
The Australian dollar came under pressure against the US dollar this week as Australian bond-yields tumbled and the Chinese economy posed much weaker than expected Industrial Production data. The AUDUSD pair fell below the 0.7100 level as the Australian ten-year bond yield tumbled to levels not seen 2016. The Aussie also came under additional pressure as the Chinese economy posted much weaker than expected Industrial Production. Chinese Industrial Output tumbled to a seventeen-year low, while the Unemployment rate of the world’s second-largest economy also increased.
- The AUDUSD pair is bearish while trading below the 0.7090 level, key support is found at the 0.7000 and 0.6930 levels.
- If the AUDUSD pair trades above the 0.7090 level, buyers may test towards the 0.7130 and 0.7180 resistance levels.
The Japanese yen currency weakened against the US dollar this week as Japanese bond yields dropped and the Bank of Japan kept interest rates on hold as widely expected. Japanese bond-yields fell to their weakest level since 2016, which prompted overall strength in the USDJPY pair towards the 111.80 resistance level. The Bank of Japan kept rates on hold at record low levels, with the Japanese central bank’s policy statement acknowledging heightened global risks, whilst also downgrading the nations economic outlook.
- The USDJPY pair is bullish while trading above the 111.60 level, key resistance is found at the 112.50 and 112.80 levels.
- If the USDJPY pair trades below the 111.60 level, sellers may test below the 111.10 and 110.80 support levels.