Sterling jumped against the USD, on reports that UK’s PM considers delaying the March 29 deadline for UK’s exit from the EU. The report stated that Theresa May would allow her cabinet to discuss such a scenario on Tuesday and announce its conclusions in Parliament later the same day. Analysts point out that delaying Brexit for a few months, does not resolve the issue and may increase the chances of a hard Brexit. At the same time Labour leader Jeremy Corbyn, finally agreed to back a second EU referendum, polarizing the situation even further. Should Theresa May announce the possibility of delaying Brexit in the UK Parliament today, we could see the pound rising even further as Brexit risks would be temporarily delayed. Cable jumped yesterday and during today’s Asian session, clearing from the 1.3070 (S1) support line and aiming for the 1.3175 (R1) resistance level. If Brexit headlines continue to back the pound, we could see the pair trading in a bullish market, yet at the same time cable could prove sensitive to any financial releases for the USD as well as Jerome Powell’s testimony. Should the pair find fresh buying orders along its path, we could see it breaking the 1.3175 (R1) resistance line and aim for the 1.3270 (R2) resistance hurdle. Should on the other hand the pair come under the selling interest of the market, we could see it breaking the 1.3070 (S1) support line and aim for the 1.2960 (S2) support level.

CAD weakens on dropping oil prices

The Loonie weakened yesterday against the USD, as oil prices marked a considerable drop. Oil prices slipped as US President Trump, called on OPEC to ease its efforts to boost the market and to keep oil prices steady. Analysts said that the Trump’s warning, may carry more weight this time as US legislators seem to be considering a law that would make OPEC subject to antitrust laws in the US according to Reuters. On the other hand analysts point out that US sanctions for Iran and Venezuela, provide a floor for oil prices, which is difficult to break. We could see further volatility for the CAD, as it seems to remain oil driven and important financial releases are expected in the week both for oil as well as the CAD. USD/CAD rose yesterday, breaking the 1.3145 (S1) resistance line (now turned to support) and aiming for the 1.3215 (R1) resistance line. We could see the pair continue to trade in a bullish market, especially should oil prices continue to drop. If the bulls maintain control of the pair’s direction, we could see the pair breaking the 1.3215 (R1) resistance line and aim for the 1.3290 (R2) resistance hurdle. Should on the other hand the bears take over, we could see the pair breaking the 1.3145 (S1) support line and aim for lower grounds.

Today’s other economic highlights

During the European session today, we get Germany’s Gfk Consumer Sentiment indicator for March. In the American session we get from the US the number of building permits for December, the CB consumer sentiment indicator for February and the API weekly crude oil inventories figure. Just before tomorrow’s Asian session, we get New Zealand’s trade data for January. Please note that ECB’s Yves Mersch will be speaking today, yet the market’s focus is expected to zoom in on Fed Chair Jerome Powell’s testimony before the US senate in the late American session. Powell is given a chance to ease the worries of the market, while on the flip side, he may maintain a dovish tone which could weaken the USD.

GBP/USD

• Support: 1.3070 (S1), 1.2960 (S2), 1.2830 (S3)
•Resistance: 1.3175 (R1), 1.3270 (R2), 1.3360 (R3)

USD/CAD H4

• Support: 1.3145 (S1), 1.3060 (S2), 1.2975 (S3)
•Resistance: 1.3215 (R1), 1.3290 (R2), 1.3360 (R3)