Pair closed last week’s trading session higher on persisting US Dollar’s weakness. Over optimistic investors and traders are selling off the US Dollars after hopes of a COVID-19 vaccine is entering the distribution line and soon will bring the pandemic to an end. Pair price hit multi-year high as stimulus package in the US is closer to be approved. Additional downside pressure on the US Dollars was the deteriorating economic release last week with the nonfarm payroll number to missed expectations.
Going into this week traders will focus on the ECB meeting. It is very well known that ECB does not like the stronger Euro as is making ECB’s job tougher in bringing Inflation above 2%. In this week’s meeting, it is very possible that ECB will try to intervene in the exchange rate of the pair using a dovish language. Even though a rate change is not expected the language the ECB will use and the comments over the recent Euro rally will probably add downside pressure on pair. On the other hand, FED is keeping the US Dollar lower with comments saying that accommodative monetary policy will remain in place until the US Economy will be firm better.
On the economic calendar, we have on Monday, German industrial production pointing lower at 1.5%. On Tuesday, European gross domestic product expected to remain unchanged at 12.6% and German ZEW survey lower at -69. On Wednesday, ECB will release their monetary policy, no interest rate change is expected. US consumer price index expected higher at 1.8%. On Friday, German Harmonized index of consumer prices expected lower at -0.5% and US Michigan consumer sentiment higher at 77.
Technically, the picture is positive. Pair traded higher with a break above 161.8% and close at 1.2120 registering a multiyear higher level. In this week’s trading session if the pair trades on the upside and breaks above 1,2177 gains will be accelerating with next level in focus the 1.2300 Alternative a rejection and close below 1.2177 may resume downside and test 1.2050 (23.6%) as first reversal point. Our traders triggered stop loss on all their short positions and now are waiting for a pullback around 1.2050 before starting buying the pair and targeting profits at 1.2177
GBP/USD FUNDAMENTALS AND TECHNICALS
Pair closed higher last week trading session mainly on US Dollars’ persisting weakness and on hopes that Brexit talks between EU-and UK will finally strike a deal before the end of the year. By the end of the week, we’ve seen pair retreated lower after news cross the wire, saying that 2 giant retailers are collapsing. One of them, Debenhams, announcing that is preparing to close its doors, threatening thousands of jobs, is bringing back fears of a slowing economic outlook.
As for this week, traders will focus mainly on the Brexit negotiation’s outcome, as during the weekend a meeting between UK PM Johnson and French leader Macron will be the catalyst for this week’s negotiations. On the COVID-19 point of view, things are getting better as UK’s Pfizer is preparing to receive approval of its vaccine and finally entering the distribution line.
In the economic calendar, we have on Tuesday, BRC Like-for-like retail sales pointing higher at 6%. On Thursday, manufacturing production expected higher at 1% and Gross domestic product lower at 0.5%
Technically the pair is positive after last week’s persisting rally that brought the pair on multi months high levels. In this week’s trading session if pair continues on the upside, and breaks and close above 100%, traders are expecting as next level 1.3600 Alternative if pair resume downside, first level to be retested is 1.3225 Our traders keeping open short positions at 1.3000, 1.3140 and 1.3252 and 1.3512 targeting profits at 1.2700 We are expecting all positions to trigger stop losses if pair breaks and close above 1.3500 Alternative if pair resumes downside short sellers will take profits and buyers will start to appear as from 1.2700 (61.8%)
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