GBP/USD: Mildly bid above 1.3100 ahead of the key PMIs

  • GBP/USD stops the previous day’s pullback as traders turn cautious.
  • Trade positive headlines fail to impress buyers ahead of the key data that can help foresee BOE moves.
  • China’s coronavirus fears, US PMIs will also be in the spotlight.

GBP/USD gradually recovers Thursday’s losses as it takes the bids to 1.3125 while heading into the London open on Friday. The pair might have benefited from the trade positive headlines but market players are waiting for the preliminary readings of January month PMIs for fresh impulse.

Following the Queen’s Royal assent to the UK PM Boris Johnson’s Withdrawal Agreement Bill (WAB), Britain is seeking trade deals with the US and Japan before the Brexit. The UK Chancellor Sajid Javid tried to placate the industries after his early-week comments triggered fears of hard Brexit. Even so, fears of the US tariffs can’t be mitigated as Tories allowed China’s Huawei to take part in 5G despite the Trump administration’s repeated notices to not do so. US President Donald Trump earlier threatened to levy tariffs on the UK if it fines the American companies like Facebook and Google.

Elsewhere, the European Union (EU) leaders keep the head high ahead of the EU-UK trade talks. The same will continue weighing on the risk tone. It’s worth mentioning that China’s outbreak of coronavirus recently offered the major blow to the global risk sentiment.

Looking forward, preliminary readings of January month PMIs from the UK and the US will be the key to watch. While the recent improvement in the UK’s earnings and CBI data have cut the odds of the BOE’s rate cuts, traders will keep eyes on the PMIs for further clarification.

Analysts at TD Securities anticipate the rate cut odds to be cut even if the data drops as they said, “While some analysts are looking at today's PMIs as the make-or-break factor for the Bank of England decision next week, we believe instead that the hard data has been disappointing enough to justify a rate cut, no matter what comes out of today's PMI report. We had initially expected a 2pt gain to the services PMI to 52.0, but the extreme weakness in the retail sector into the end of the year suggests that firms may not be all that optimistic. We've downgraded our forecast and now fall in line with consensus at 51.0. For manufacturing, we look for a smaller gain, as there seem to be more fundamental issues there, and we look for an increase to 48.0 (market forecast 48.8).”

Technical Analysis

A daily closing beyond the 45-pip range between 1.3145 and 1.3100, including 50% Fibonacci retracement of its November-December 2019 upside and 21-day SMA respectively, becomes necessary for the pair to register increased volatility.

Additional important levels

Today last price 1.3122
Today Daily Change 2 pips
Today Daily Change % 0.02%
Today daily open 1.312
Daily SMA20 1.3092
Daily SMA50 1.3053
Daily SMA100 1.2831
Daily SMA200 1.2691
Previous Daily High 1.3152
Previous Daily Low 1.3097
Previous Weekly High 1.312
Previous Weekly Low 1.2954
Previous Monthly High 1.3515
Previous Monthly Low 1.2896
Daily Fibonacci 38.2% 1.3118
Daily Fibonacci 61.8% 1.3131
Daily Pivot Point S1 1.3094
Daily Pivot Point S2 1.3068
Daily Pivot Point S3 1.3039
Daily Pivot Point R1 1.3149
Daily Pivot Point R2 1.3178
Daily Pivot Point R3 1.3204



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