Daily Commentary | 13/03/2018
Britain-EU close to agreeing of implementation period
• Junior Brexit minister Robin Walker, stated that Britain and the EU are close to agree the details of the Brexit transition period. According to media Britain is to adhere to EU regulations for a limited time period after it leaves the EU and the deal is to be finalized at a summit with the EU on March 22nd -24th. On other headlines, it is mentioned that companies in Britain and other European countries will face additional costs of 58 Billion GBP in case of a hard Brexit. In such a scenario, the British Finance sector could suffer another blow while the EU prepares for a cheaper capital market after Brexit. Overall, we might be experiencing a small prelude of the preparations for the post Brexit antagonism of EU’s and UK’s financial markets. Should there be further positive headlines about Brexit, we see the case for the GBP to strengthen.
• GBP/USD jumped and tested the 1.3915 (R1) resistance level yesterday. We see the case for the pair to continue to trade in a sideways manner in the next couple of days, however it could be the case that the pair may experience some bullish tones should there be further positive Brexit headlines. Also, the US CPI rate release and Philip Hammonds Spring Statement could affect the pair’s direction today. Should the pair find fresh buying orders it could break the 1.3915 (R1) resistance level and aim for the 1.4040(R2) resistance barrier. On the other hand should the pair come under selling interest it could break the 1.3775 (S1) support line.
Japan is to push for further crypto regulation at G20
• Media suggest that at the G20 meeting, Japan will push for renewed efforts to prevent the use of cryptocurrency for money laundering purposes. Cryptocurrencies are on the agenda of the G20 meeting and especially their use for money laundering purposes. Despite the broader consensus for the international community to step up on these efforts, the regulations are still looser in some countries than others. On other news, Bitcoin brokers seem to favor the idea for Bitcoin to be regulated in the same way as gold. Should such an idea have a wider audience it could be the start of a regulatory framework which could allow for further acceptance of the cryptocurrency, however there is still a long way to go on this. Any further headlines, supporting a tighter regulatory framework for cryptocurrencies could hurt Bitcoin in the short term.
• Bitcoin traded in a sideways manner yesterday testing the 8650(S1) support line. We see the case for the cryptocurrency to continue to trade in a sideways manner in the next couple of days, however it may experience some bearish tones, should there be further negative headlines. Should the bulls take the driver’s seat we could see the cryptocurrency aim for the 11600 (R1) resistance line. On the other hand, should the bears take the reins we could see the pair breaking the 8650 (S1) support line and aim for the 7425 (S2) support barrier.
As for today’s other economic highlights:
• From the US we get February’s inflation data and from New Zealand the current account for Q4. As for speakers, UK’s Chancellor Philip Hammond is to deliver his spring forecast statement and a possible positive economic outlook could support the GBP. BoC’s governor Stephen Poloz also speaks.
• Support: 1.3775 (S1), 1.3620(S2), 1.3500(S3)
• Resistance: 1.3915(R1), 1.4040(R2), 1.4168(R3)
• Support: 8650(S1), 7425(S2), 5710(S3)
• Resistance: 11600(R1), 12365(R2), 13650(R3)