Pound Surged After UK PM Calls for Early Election
By: Eddy Peng Apr 19, 2017Chart 1: GBPUSD Daily
The drop in U.S. Treasury yields pressured the dollar, while U.S. manufacturing output dropped for the first time in seven months. U.S. Treasury yields fell to five-month lows as raised concerns over France’s first round of presidential elections this weekend and ongoing geopolitical tensions such as North Korea’s nuclear test increased demand for safe-haven U.S. debt. The dollar index, which measures the greenback against a basket of six major currencies, was down 0.85 percent at 99.4. Due to the declined MACD, it may drop further to find technical support at 200-day moving average of 98.818.Chart 2: USD Index Daily
Another critical issue in U.S. that really affects the market is its tax reform agenda. The tax-writing committee of the U.S. House of Representatives will begin holding hearings on a Republican tax reform proposal next week, the panel’s chairman said on Tuesday, even as the timeline for overhauling the tax code slips toward late 2017. Tax experts say the proposal’s future depends on whether the White House backs it. President Donald Trump said on Tuesday that his tax reform plan would create “a level playing field” for U.S. industry, which is a phrase widely viewed as referring to some kind of border tax. If Trump succeed to move his tax reform forward, it may help reinforce the performance of the dollar index and the U.S. economy as well. Turning back to look at sterling’s performance with RSI (14), it’s found at 71.0586 which is over than the median line (50), revealing that it’s currently trading at the bullish market. Since we do not see evidences of USD’s rally at this moment, sterling may continue to be in the rise this week.Chart 3: GBPUSD Daily – RSI