The British pound remains one of the weakest currencies
The US dollar was able to gain a foothold on the first day of the new trading week. However, we have not received interesting news, so we observed just sharp fluctuations of the pair GBP/USD. The British pound is locally overbought and lost 80 points yesterday.
The pair GBP/USD has showed strengthening for 9 of the last 11 trading days. However, the British pound still remains one of the weakest currencies of "Big Ten" in the last 12 months.
It is clear that the main pressure factor was the Brexit, however, it’s worth to say that the economic situation is not happy. A recently published report on the trade deficit of the EU reached a record 8.1 billion pounds, suggesting that the weakness of the euro zone extends to the British economy.
On the current correction the pair GBP/USD is extremely overbought currency, so at the slightest negative incentives, the GBP/USD may resume falling.
Such an event can be a meeting of the Bank of England, scheduled for Thursday. If the rate decision is predictable, the comments of officials should be analyzed in more detail. If comments are disappointing, the pair GBP/USD will get stimulus to descend.
Today we will get retail sales data for February. The index is expected to decline by 0.1%, retail sales excluding autos may fall even more - by 0.2%. NY Empire State Manufacturing Index is expected to decline by -10.0 vs. -16.46 in February, NAHB Housing Market Index is expected to increase to 59 from 58.
The UK data will be released on Wednesday - Claimant Count Change is expected -9.1K, the average earnings including bonus is expected to grow by 2.0%. We are waiting for one more attempt of the pair GBP/USD to get the recent highs above 1.4300.
How to trade
If we get weak data from the US, the pair will try to get up to the area of 1.44. Then it makes sense to consider buying PUT options on approaching the mark of 1.44 with the immediate goal at the level of 1.4240 and then 1.4060.