A Mixed Week Ahead for the GBPUSD on Rate Decisions

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A Mixed Week Ahead for the GBPUSD on Rate Decisions

By Adam Teen | Tuesday, November 1st, 2020

The GBPUSD failed to gain any more ground after it made its decline last week. By the close of Monday’s Asian session, the price still lingered close to Friday’s closing price of 1.2189 marking a flat weekly open.

It has been a 2 week period marked by stronger bearish moves in stark contrast to the bullish recoveries.

The trend on the 1 hour chart has been bottled below a declining 200MA for the greater part of recent trading, with the Oct 25 th – 27 th recovery failing on Thursday at 1.2270.

The same level remains an important one to watch for today’s trading because it is our immediate resistance.

Interesting support/resistance levels emerging

On what will seem to be a very mixed trading week for the cable, the main important level for the bears is the 1.2000 psychological level. Owing to the view that the recovery that began after the 25th October bottom (1.2081) failed to move above 1.2270, it is very possible that the bears will attempt a second dash towards the 25 October bottom or even lower.

GBPUSD 1 hour chart

There is formidable selling pressure continuing from the last few sessions. That is evident in this setup because the 1.2270 high set on 27 th October is still lower than its preceding high of 1.2330 set on 19 th October.

News Events to give mixed movement

The Sterling will be under close watch for the greater part of the week because there are major news events touching no both elements of the pair. The main headlines affecting the sterling are to do with the BoE announcement on its Monetary Policy decision on Thursday.

A current inflation report will be given along with the announcement. Most pointers are towards the rates remaining at their current level, but to be certain, it would be important to wait for the actual outcomes of the meetings. The 3Q GDP data are also set to be reported on the same day.

Typically, the USA’s Federal Reserve aligns its rate decisions with close consideration to what the BoE does. Expect a shaky week for the GBPUSD.

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Bias is neutral for the moment

At the moment, the GBPUSD is trading at 1.2184, with a very volatility seen in the market. By the time the London session opened, the pair had only managed to trade tightly within a 50 pip range. For most of the European session, there is a high change that price will squeeze itself towards a tight triangle before breaking lower.

Week Ahead: Rate Decisions from the BOJ, ECB, BOC, and 5 Long-Term Trade Setups

BOJ Rate Decision

The Bank of Japan(BOJ) is scheduled to take center stage on Tuesday. In its monetary policy meeting, there are no changes expected to its current interest rate level at -0.10%. There is some sense of optimism that BOJ Governor Haruhiko Kuroda will announce an upgrade on growth forecasts. Easing tensions in the Middle East as well as the US-China Phase One deal is expected to be credited for a positive growth outlook.

USDJPY Outlook

On the weekly time frame, we can see that USDJPY is trading beyond resistance at the falling trend line. If there are enough buyers in the next few weeks of trading, we could see the currency pair soon rally to its March 2020 highs at the 112.00 handle. On the other hand, If sellers dominate in the next few weeks, USDJPY could fall to the confluence of support at 109.50. This price coincides with the previous trend line, 100 SMA and 200 SMA, and 38.2% Fib level.

USDJPY Weekly Chart

UK employment data, PMIs

Market participants will be closely watching the economic reports from the UK next week following dovish remarks from BOE officials and last week’s disappointing CPI. The Claimant Count Change report for December will be released on Tuesday. It is estimated to print at 33,400. Meanwhile, the unemployment rate is seen at 3.8%. Then on Friday, the manufacturing PMI and services PMI reports for December are eyed at 48.8 and 51.1, respectively. Worse-than-expected data could be bearish for the pound because they could give the BOE more reason to ease. On the other hand, positive readings could be bullish for the currency as they calm fears of a rate cut.

GBPUSD Outlook

On the weekly time frame, we can see that GBPUSD has pulled back some of its gains to the 38.2% Fib level. This price, around 1.3040, also coincides with the 100 SMA and 200 SMA. A strong bullish candle closing above last week’s high at 1.3203 could mean that GBPUSD is on its way to its December highs above 1.3500. On the other hand, a close below December 22 at 1.2896 could mean that could be headed to support at 1.2575.

GBPUSD Weekly Chart

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ECB rate statement, German and French PMIs

The ECB is scheduled to announce its monetary policy decision on Thursday. In the minutes of their last meeting, policymakers expressed their view that inflationary pressures remain resilient. Market participants will be keeping an ear out for ECB President’s Lagarde’s view on inflation and if she echoes the not-so-dovish tone of the minutes, the euro could rally. There are no changes expected to the central bank’s current interest rate level at 0.00%.

Then on Friday, a roster of PMI reports from two of the largest countries in the euro zone are due: Germany and France. Stay tuned to our website next week as we provide updates on these data.

EURUSD Outlook

On the daily time frame, we can see that the currency pair has formed higher highs which were succeeded by a lower high. In turn, a head and shoulders chart pattern has materialized. A bearish close below the neckline support at 1.1080 could mean that EURUSD may soon fall to its November 2020 lows at 1.1000. On the other hand, reversal candles at the neckline could signify that there are still buyers in the market who could push price back up to 1.1170.

EURUSD Daily Chart

BOC rate statement, Canadian CPI and Retail sales

On Wednesday, the BOC will announce its rate statement. Based on market expectations, no changes will be made to the bank’s current interest rates at 1.75%. It could, however, change if the CPI report significantly veers away from forecasts. The headline reading is eyed at 0.2% while the core CPI is estimated at -0.2%. Worse-than-expected figures could be enough to make the BOC sound more dovish, so watch out!

Then on Friday, Canada will release its retail sales report for December. The headline reading is seen at 0.1% while the core reading is anticipated at -0.1%.

USDCAD Outlook

On the daily timeframe, USDCAD is seen to have recouped some of its losses back to the 38.2% Fib level. This price, around 1.3050, also coincides with a previous low. A bearish close below the January 10 low at 1.3020 could mean that USDCAD may soon fall to its December lows at 1.2950. Conversely, a bullish close above January 10 highs 1.3102 could hint at an impending rally up to the 100 SMA at 1.3180.

EURUSD Daily Chart

AU employment and NZ CPI

Australia will be releasing its employment data on Thursday. It has been forecasted that 11,200 jobs were added in December and that unemployment will be at 5.2%. On the same day, New Zealand’s quarterly CPI is estimated at 0.4%.

AUDNZD Outlook

AUDNZD has been trading below trend line support, however, the currency pair seems to be testing it now for resistance. Near-term support is at 1.0320 where AUDNZD bottomed last week. However, be wary of a strong bullish close above this week’s highs at 1.0455 as it could mean that buyers could still push price to resistance at 1.0540.

AUDNZD Daily Chart

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British Pound Technical Forecast: GBP/USD, GBP/JPY, EUR/GBP

British Pound Sterling, GBP/USD, GBP/JPY, EUR/GBP Analysis

  • It was a big week for the British Pound as the currency clawed back prior losses against USD, JPY and the Euro.
  • GBP/USD has been in the midst of extreme volatility, making for a difficult backdrop for trend or momentum traders; but potentially presenting interest for breakout or swing strategies.
  • GBP/JPY may be attractive for reversal potential while EUR/GBP May hold some interest for continuation scenarios.

British Pound Spikes Against USD After 35-Year-Lows

It was a big week for the British Pound. It was just last Friday that GBP/USD set a fresh 35-year-low, as a potent combo of both USD-strength and GBP-weakness pushed prices in the pair below the 1.1500 level for the first time since 1985. Buyers came back this week, however, and there was a bit of aggression in the move as GBP/USD rallied by more than 1,000 pips from those lows that were set just a week ago.

But it wasn’t just against the US Dollar that the Pound showed strength, as the currency also gained against both the Japanese Yen and the Euro, even as another risk factor flared with the UK now being shut down in the effort of stemming the spread of the novel coronavirus. The Bank of England has already hurried into action, similar to both the Fed and the ECB; but at this point it can be difficult to make long-term prognostications given the historical nature of the events before us. Below I parse through three of the more popular GBP-pairs with a look towards the week ahead.

GBP/USD: Extreme Moves, Extreme Volatility, Tread Quietly

Last week’s breakdown in Cable brought on fresh 35-year lows with the pair testing below the 1.1500 psychological level temporarily. That low was set last Friday; and in the week since a very different theme has taken hold as GBP/USD has rallied by more than 1,000 pips off of those lows.

With a move and backdrop carrying such an extreme nature, it can be difficult to project how prior iterations of technical criteria may help with future decisions; because, after all, if there are more reasons for buyers or sellers to crush prices through support or resistance, there’s less reason (and probability) for those levels to hold. This also means trend trading can be more challenging, as a potential reversal may be lurking around the next corner and range strategies can be utterly unattractive.

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