The GBP/USD pair formed a bullish pinbar formation on Monday and thus extended gains to near 1.51 levels in Asia today. The sell-off in the EUR/GBP ahead of the Thursday’s ECB meeting helped the GBP/USD recover from the Monday’s low of 1.4994. The focus today is on the Bank of England’s Carney’s speech and the UK manufacturing PMI report.
Carney could overshadow UK PMI report
The UK manufacturing PMI for November is seen coming-in at 54.00 from Oct’s 55.5. The inflow of new export orders would be watched out by markets; since the UK’s worsening current account to GDP ratio is a cause of concern and could take a centre stage in 2016.
BOE’s Carney comes a few minutes ahead of the PMI report and thus could push the GBP/USD pair back to around 1.5087 (61.8% of Apr-Jun rally) with his cautious comments on the UK economy. Consequently, the cable may have a hard time rising above 1.5124 (hourly 200-MA) despite a strong PMI report.
Sterling could take out 1.5124 (38.2% of 1.5335-1.4994 + hourly 200-MA) and test 1.5185 (23.6% of July 2014-Apr 2015 plunge) if Carney surprises markets with a slightly hawkish tone and the PMI number prints higher than expected.
On the other hand, a dovish carney coupled with a weaker-than-expected UK PMI report could lead to a failure to sustain above 1.5087 and trigger a sell-off to 1.50 handle.
Technicals – Bullish above 1.5087
Sterling’s bullish pinbar from the 7-month low, followed by a rise to 1.51 levels in Asia today indicates the pair is likely to take out the hourly 200-MA at 1.5124 and test 1.5163 (Sep 4 low) – 1.5185 (23.6% of Jul 14-Apr 15 plunge). On the other hand, a repeated failure to take out 1.5107 followed by a break below 1.5087 (61.8% of Apr-Jun rally) could trigger a fresh drop to 1.5028 (Nov 27 low).
EUR/USD Analysis: Eyes US ISM number
The EUR/USD pair dropped for the fourth consecutive session on Monday. The ECB action appears to have been priced-in by the markets, however, the uncertainty still persists about the kind of action that the ECB will announce this Thursday. This uncertainty is keeping the EUR under pressure, although the magnitude of the daily fall has dropped off late, which again points to the fact that the ECB action may have been priced-in by the markets.
Eyes US data, EU data could be non-event
The Eurozone and German PMI figures could turn out to be non-events for the markets so long as the actual figures are not surprisingly weak/strong. Moreover, the figures are unlikely to influence the ECB and thus markets are likely to turn a blind eye towards the same ahead of Thursday’s ECB event.
The US ISM manufacturing figure could attract attention; especially the employment sub index. The pair could come under pressure solely on the back of a strong employment sub index, since it would increase the odds of a better-than-expected non-farm payrolls report due on Friday.
Technicals – Could test hourly 200-MA
A triangle formation could be seen on the hourly chart and a bullish break from the same could see the pair rise to its hourly 200-MA seen at 1.0630 levels. On the other hand, a bullish break from the triangle formation, but a repeated failure to take out 1.06 could lead to a much sharper sell-off to 1.05 levels.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
EUR/USD holds above 1.0700 ahead of key US data
EUR/USD trades in a tight range above 1.0700 in the early European session on Friday. The US Dollar struggles to gather strength ahead of key PCE Price Index data, the Fed's preferred gauge of inflation, and helps the pair hold its ground.
USD/JPY jumps above 156.00 on BoJ's steady policy
USD/JPY has come under intense buying pressure, surging past 156.00 after the Bank of Japan kept the key rate unchanged but tweaked its policy statement. The BoJ maintained its fiscal year 2024 and 2025 core inflation forecasts, disappointing the Japanese Yen buyers.
Gold price flatlines as traders look to US PCE Price Index for some meaningful impetus
Gold price lacks any firm intraday direction and is influenced by a combination of diverging forces. The weaker US GDP print and a rise in US inflation benefit the metal amid subdued USD demand. Hawkish Fed expectations cap the upside as traders await the release of the US PCE Price Index.
Sei Price Prediction: SEI is in the zone of interest after a 10% leap
Sei price has been in recovery mode for almost ten days now, following a fall of almost 65% beginning in mid-March. While the SEI bulls continue to show strength, the uptrend could prove premature as massive bearish sentiment hovers above the altcoin’s price.
US core PCE inflation set to signal firm price pressures as markets delay Federal Reserve rate cut bets
The core PCE Price Index, which excludes volatile food and energy prices, is seen as the more influential measure of inflation in terms of Fed positioning. The index is forecast to rise 0.3% on a monthly basis in March, matching February’s increase.