Currently, GBP/USD is trading at 1.2466, up 0.09% on the day, having posted a daily high at 1.2477 and low at 1.2384.
GBP/USD has recovered from below the 1.24 handle and early Asian lows as the greenback falls away in the US session today. From the US docket, Durable Goods Orders came in above estimates 1.8% in January while Core orders have unexpectedly contracted. Pending Home Sales were dropping 2.8% for January vs. a 0.8% gain consensus and the Dallas Fed Manufacturing Business Index climbed to 24.5.
Trump's speech to the joint session of Congress is the most important event this week - BBH
UK: Willing to accept another Scottish referendum if it takes place after it leaves EU - BBH
Elsewhere, we are focused on Trump & Brexit implications with the surfacing of the Scottish referendum proposals that knocked some wind out of sterling overnight. The UK Times report over the weekend explained that Nicola Sturgeon and Theresa May are heading for a showdown over who has the right to call another independence referendum and when it should be held. In respect of Trump's Budget today, this showed a $54 billion boost to defence. There were significant cuts seen in Foreign Aid and Federal Agencies. The dollar was hurt on more news that Trump’s first Budget will not address taxes or mandatory spending.
Fed's Kaplan: There is still jobs market slack
GBP/USD levels
Although there has been some weakness in the pound, analysts at Commerzbank argued that prices will need to go sub 1.2250 in order to alleviate immediate upside pressure and trigger losses to the 1.1988/80 recent low. "Immediate support is the 1.2347 February low." However, analysts at Scotiabank are bearish on a break below 1.2405, "Holding the range gives the GBP a neutral feel but broader risks are tilted to the downside, we think; a daily close under 1.2405 (40-day MA) may be enough to push the pound back towards the early Jan low around 1.1995/00." To the upside, 1.2480 and the 50/200 smoothed smas align guarding 21st Feb highs at 1.2507 and 24th Feb high at 1.2569.
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