Pair closed last week’s trading session higher, on conflicting and mixed economic release from both sides of the Atlantic. Worst than expected consumer sentiment in the US and is conflicting the strong economic sentiment and this kept rising bond yields lower and helped the pair retreat higher. On the European side, the resume of the vaccination program and the new Pfizer 50 million dozes have given European sentiment a positive bias and hopes for faster than expected recovery.
As for this week, traders will focus on ECB meeting. As it is widely expected ECB will keep its dovish tone at this meeting. Any possible change on the ECB side will be taken as hawkish and push the pair even higher. Another negative event is the 3rd wave of covid-19 infections in France and Germany. With both countries now in a mini full lockdown, will keep traders on stand-by whether ECB will comment on this and how the comment will be taken by markets.
On the economic calendar we have on Tuesday, ECB bank lending survey report and German Producer price index pointing higher at 3.2% On Thursday, ECB monetary policy meeting and European consumer confidence pointing lower at -10.9 On Friday, German Markit manufacturing PMI expected lower at 65.9 German Markit PMI lower at 57 European Markit PMI lower at 52.8 and US Markit manufacturing PMI higher at 59.3
Technically, the picture is positive. Pair closed just above 50% at 1.1980 In this week’s trading session if the pair continues on the upside, we are expecting to test the next resistance of 1.2060 (38.2%) If the pair resumes downside and close below 61.8% will change the picture to negative with next level in focus the 1.1570 (100%) Our traders keeping open their long positions at 1.2174, 1.2060, 1.1972 and 1.1878 targeting profits at 1.2343 As it was expected we see some short sellers to take control above 1.1973. we are expecting more short sellers around 1.2060 and buyer to take profit from some of their long positions
GBP/USD FUNDAMENTALS AND TECHNICALS
Pair closed last week’s trading session higher mainly on the first week of reopening in the UK that helps boost retail sentiment. Mixed economic releases from the US also added some upside bias on the pair.
As for this week, traders will focus on the heavy Economic releases from the UK. If the economic release will continue improving we might see the pair continue higher. With more restrictions to be waived this week, retail sentiment will also continue improving and will be taken as positive from GBP side. BOE Governor Bailey’s speech and other BOE officials’ speeches might create some additional volatility in this week’s trading session.
In the economic calendar we have on Tuesday, ILO unemployment rate pointing higher at 5.2% and average earnings unchanged at 4.8% On Wednesday, Consumer price index expected higher at 0.7% and retail price index lower at 0.3% On Friday, GFK consumer confidence expected higher at -12 Retail sales higher at 4.2% Markit manufacturing PMI higher at 59 and services PMI higher at 58.6
Technically the pair is neutral after closing just below 38.2%. In this week’s trading session if pair trades on the upside and close above 38.2% the picture will be turned positive with next level to be tested at 1.3920 Alternative if pair retreats on the downside and break and close below 50%, the first level to be retested is 1.3600. Our traders kept open their long positions at 1.3840 and 1.3727 targeting profits at 1.4000
For more detailed economic calendar events please visit our live economic calendar on:
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