Pair closed last week’s trading session higher on US Dollar’s weakness after an “almost” result of the US presidential elections was showing that Democratic Biden might be the next US president. FED maintained its policy unchanged and non-farm payrolls came out better than expected. As it was widely expected the economic calendar did not create any volatility as all eyes were turned to the US elections result.
Going into this week traders will brace for increasing volatility after Biden won the US presidential elections. During the weekend results came out showing that democratic Biden won the elections by locking 290 electoral votes against Donald Trump 214 electoral votes. Equity markets were almost unchanged last week as awaited the result. Remain to see this week how markets will price in the result and how the US Dollars will behave. A divided senate result of 48 -48 seats will be looked at as negative for the markets, although a clear Biden win will be seen as positive as markets are hoping that Biden will be rebuilt US external policy and relations with EU.
On the economic calendar we have on Tuesday, European ZEW survey Economic sentiment pointing higher at 63.7 On Thursday, German Harmonized index of consumer prices expected unchanged at -0.5% and US Consumer price index expected unchanged at 1.7% On Friday, European gross domestic product to remain unchanged at 17% and Michigan consumer sentiment higher at 82
Technically, the picture is neutral. Pair traded higher and closed at 1.1875 just above 161.8% In this week’s trading session if the pair continues on the upside and close above 161.8% gains will be accelerate and retest 1.2000 Alternative a break and close below 161.8% pair may resume downside and retest 1.1600 Our short traders added more short positions at 1.1700 and 1.1854 targeting profits at 1.1600 As it was expected buyers took control at 1.1600 and took profit all their long positions at 1.1860 If this week pair will retread downside move, we are expecting short sellers to take profit their short positions below 1.1700 and buyer to take control around same levels of 1.1600 targeting profits above 1.1800
GBP/USD FUNDAMENTALS AND TECHNICALS
Pair closed higher last week’s trading session amid US Dollar’s weakness and on BOE monetary policy change. BOE extended QE program by 150 billion in bond buying. Statements from BOE reiterate that the central bank is committed to do more. BOE highlighted that even though global growth remains uncertain, the bank will not act at this moment on bringing negative rates. Negative rates are ongoing process but not at this stage.
As for this week traders will focus on Brexit talks outcome and how the already in force, second lockdown due to covid-19 outbreak in the UK will be negatively affected business. Speeches from BOE’s governor Bailey and other officials, must be closely monitored as the bank may signaled more stimulus due to the second lockdown.
In the economic calendar we have on Tuesday, ILO unemployment rate pointing higher at 4.8% On Thursday, Gross domestic product expected higher at 15.8% and industrial production higher at 0.5%
Technically the pair is neutral after last week’s upside move. In this week’s trading session if pair continues on the upside, traders are expecting as next level 1.3259 Alternative if pair resume downside, first level to be retested is 1.2853 Our traders keeping open short positions at 1.3000 and adding new shorts at 1.3140 targeting profits at 1.2700 We are expecting more aggressive short sellers to appear on the way up. Alternative if pair continues the downside short sellers will take profits and buyers will start to appear as from 1.2700 (61.8%)
For more detail economic calendar events please visit our live economic calendar on:
*The material does not contain an offer of, or solicitation for, a transaction in any financial instruments. 10TradeFX accepts no responsibility for any use that may be made of these comments and for any consequences resulting in it. No representationor warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk. CFDs are leveraged products. CFD trading may not be suitable for everyone and can result in losing all your invested capital, so please make sure that you fully understand the risks involved.