Thursday has been a challenging trading day for traders of the EUR/USD and GBP/USD as the U.S. dollar suddenly u-turned after U.S. President Donald Trump promised to impose tariffs on steel and aluminum imports. The dollar significantly depreciated against the euro after the EU said that it will “react firmly to Trump’s tariffs”. Trump’s announcement has brought to the fore the next escalation in trade wars which could be a permanent downgrade for the greenback. Hawkish rhetoric from New York President Dudley took a backseat to fears of a trade war.
Neither major currency pair provided a sustained profit yesterday while we had to struggle with false breakouts and choppy swings. However, we hope for more profitable trading conditions today while the focus will be on the British pound.
The pound tumbled after U.K. Prime Minister Theresa May rejected the EU’s Brexit draft Wednesday and now the market is waiting for more clarity on the U.K.’s demands of late. Theresa May is delivering the sixth and final “Road to Brexit” speech today, detailing the Government’s plans for the U.K. outside the EU. The time for May’s speech has yet to be scheduled.
We expect higher volatility in the GBP/USD but advise caution as the pound is known for its exaggerated volatile swings.
We wish you good trades and a wonderful weekend.
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