It is safe to say that we can call the new week, the"Week of Great Britain." Most of the macroeconomic reports planned for the week will concern the GBP/USD pair. Most of the reports regarding the GBP/USD pair will come from the UK. In addition to economic data, it will be decided whether a new Brexit date will be postponed, whether Boris Johnson and the European government will be able to agree on a "deal" and whether the British Parliament will block a new deal if, by some miracle, Brussels and London succeed to reach consensus on all contentious issues in five days? Thus, the EUR/USD pair may feel relatively calm, just as it did the previous week, but the British pound is likely to break volatility records and very often change its direction if the news comes mixed. But consider all the data in more detail.
As we said, most statistics come from the UK. On Tuesday, this will be data on unemployment and changes in average wages for August, on Wednesday - the consumer price index for September, on Thursday - retail sales and the European Union summit on Brexit starts. In addition, the United States will receive information on retail sales for September (Wednesday). However, despite the importance of future reports, we believe that the main attention of traders will be focused on Brexit, on the EU summit and on any information from Boris Johnson, Donald Tusk, Jean-Claude Juncker, Michel Barnier, Angela Merkel, Emmanuel Macron. It is these leaders who most often speak out about the promotion of the Brexit negotiation process and have the greatest influence on it. Regarding the chances of fulfilling one or another Brexit option, we recommend that traders not try to guess the future. Brexit has repeatedly shown to all market participants that trying to predict how everything will end is an ungrateful affair. The growth of the pound was often associated with rumors and unfounded market expectations, which each time gave way to a stronger fall in the British currency. That is why the movement of the pound/dollar pair this week may well be illogical and consistent with the nature of the incoming news, and all macroeconomic reports can be completely ignored. Thus, the main principle will be the "principle of caution" when trading GBP/USD in the new week.
As for the EUR/USD pair, here from macroeconomic events we can note the report on the change in industrial production in August on Monday, the inflation report for September on Wednesday. The greatest interest, of course, will be caused by the consumer price index, which in recent months has fallen to absolute lows. A value below 1.0% will no longer be considered just low, but critical. And then it can be expected from the ECB and a new reduction in key rates, the quantitative stimulus program in the first months of its operation is unlikely to be changed, but in the future it can be expanded. And for the euro, these are all potential bearish factors. We still believe that in the confrontation with the dollar, a single European trump card is very small. And at the moment, we consider the main factor behind the growth of the euro a banal technical need to be adjusted from time to time. There is no positive news from the EU. Recently, everything is not good in the United States too, but America's economy is still stronger, macroeconomic indicators are higher, monetary policy is tougher. It is these factors that continue to play for the dollar.