Brexit: Why did the pound rise? Further euro growth is possible under a number of conditions

The euro and the pound continued to strengthen against the US dollar, despite the good fundamental data on the American economy, which were published yesterday in the afternoon.

The dollar is under pressure from a weak report on the labor market, which was published last Friday, while the pound has its support from the expectations of reaching an agreement on Brexit.

The pound rose yesterday by more than 2% after news that British Prime Minister Theresa May and European Commission President Jean-Claude Juncker agreed on changes in the Brexit agreement. May will present these changes at a vote in the British parliament in the evening.

Many expect this to get approval from British lawmakers. Theresa May said that she is counting on the support of key members of parliament.

After yesterday's meeting with European Commission President Jean-Claude Juncker, although it had previously been announced that there would be no more meetings, May said that if the British parliament did not approve the agreement on Tuesday, there would be no other changes.

As noted above, yesterday's data on the US economy did not support the US dollar.

According to the report, inventories of US companies rose in December. According to the US Department of Commerce, inventories in December increased by 0.6% compared with the previous month and amounted to 1.995 trillion US dollars. Economists had expected stocks in December to grow by 0.6% compared with the previous month. The increase was mainly due to stocks in the wholesale and retail trade, where the increase was about 1.0%.

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An index showing US employment trends rose in February. This indicates a further recovery in the labor market, despite the weak Friday report. According to the Conference Board, the employment trends index in February 2019 was 111.15 points against 109.34 points in January of this year.

However, the company said that, despite the increase in the indicator, there has been no uptrend in recent months, indicating a likely slowdown in employment growth in 2019. Despite this, the labor shortage continues to grow amid high demand, which is a good sign for job seekers.

As for the technical picture of the EURUSD pair, further euro growth will be possible only after going beyond the resistance of 1.1265, which will lead to a reversal of the downward trend and the renewal of major resistance in the 1.1290 and 1.1320 area. If there is no demand for risky assets above 1.1265 resistance and the price returns below this level closer to the afternoon, the pressure on the euro may increase, which will lead to a decrease in the trading instrument in the support area of 1.1220 and 1.1175.

The Australian dollar continued its weak recovery against the US dollar, however, data that housing loans financing in Australia was still low in January had a negative impact on the rate.

According to the report, the number of approved housing loans in January fell by 2.6% compared with December. Economists had expected the number of approved loans to remain unchanged.

The material has been provided by InstaForex Company - www.instaforex.com