In the overnight trading session changes in the value of individual currencies are rather symbolic, but the strengthening of the US dollar is not so much visible. It is worth paying attention to the new wave of charges against the Prime Minister of Japan Abe, which push USD / JPY at 111.00 and persistence by AUD / USD over the important resistances yesterday. In the Asian session, none of the currencies changes the value by more than 0.2%. EUR / USD the day will start at 1.1780, GBP / USD is at the 55-week average at 1.34. The Wall Street indexes recorded fairly solid increases, but the scale was limited in the second part of the day, futures on the SP500 are stable at 2732 points. USA 10Y yields moved back a few bps from recent highs and now stands at 3.05%. Oil is still more expensive - the WTI barrel is paying USD 72.5, an ounce of gold is valued at USD 1290.
On Tuesday, 22nd of May the main event of the day is Inflation Report Hearings in the UK, together with Public Sector Net Borrowing data release and speeches from various MPC members including Mark Carney. Later during the day there are other data releases from Germany (Bundesbank Monthly Report), Canada (Wholesale Sales) and the US (Richmond Fed Manufacturing Index).
GBP/USD analysis for 22/05/2018:
In the UK, public sector borrowing data along with CBI selling prices survey will be released soon and in addition, another round of Brexit negotiations is also due to start in Brussels. Nevertheless, the main stage is still held for Governor Carney who will testify before the parliament's Treasury Committee. After February statements of "monetary policy would need to be tightened somewhat earlier and by a somewhat greater extent" some questions on the Bank's communications strategy are likely, but ahead of a week that contains key data on UK CPI inflation and retail sales, the market will be watching for any signs that strengthen the case for an August rate rise (hawkish tone or remarks)
Let's take a look at the GBP/USD technical picture at the H4 time frame. The market has made a new swing low at the level of 1.3391 in extremely oversold conditions. Currently, the price is trying to test the nearest technical resistance at the level of 1.3451 and 1.3483. Any successful breakout through this level would indicate a rally towards the next resistance at the level of 1.3617. The growing bullish divergence supports the upward bias.
