A Mixed Week Ahead for the GBPUSD on Rate DecisionsBy Adam | Tuesday, November 1st, 2016
The GBPUSD failed to gain any more ground after it made its decline last week. By the close of Monday’s Asian session, the price still lingered close to Friday’s closing price of 1.2189 marking a flat weekly open.
It has been a 2 week period marked by stronger bearish moves in stark contrast to the bullish recoveries.
The trend on the 1 hour chart has been bottled below a declining 200MA for the greater part of recent trading, with the Oct 25th – 27th recovery failing on Thursday at 1.2270.
The same level remains an important one to watch for today’s trading because it is our immediate resistance.
Interesting support/resistance levels emerging
On what will seem to be a very mixed trading week for the cable, the main important level for the bears is the 1.2000 psychological level. Owing to the view that the recovery that began after the 25th October bottom (1.2081) failed to move above 1.2270, it is very possible that the bears will attempt a second dash towards the 25 October bottom or even lower.
GBPUSD 1 hour chart
There is formidable selling pressure continuing from the last few sessions. That is evident in this setup because the 1.2270 high set on 27th October is still lower than its preceding high of 1.2330 set on 19th October.
News Events to give mixed movement
The Sterling will be under close watch for the greater part of the week because there are major news events touching no both elements of the pair. The main headlines affecting the sterling are to do with the BoE announcement on its Monetary Policy decision on Thursday.
A current inflation report will be given along with the announcement. Most pointers are towards the rates remaining at their current level, but to be certain, it would be important to wait for the actual outcomes of the meetings. The 3Q GDP data are also set to be reported on the same day.
Typically, the USA’s Federal Reserve aligns its rate decisions with close consideration to what the BoE does. Expect a shaky week for the GBPUSD.
Bias is neutral for the moment
At the moment, the GBPUSD is trading at 1.2184, with a very volatility seen in the market. By the time the London session opened, the pair had only managed to trade tightly within a 50 pip range. For most of the European session, there is a high change that price will squeeze itself towards a tight triangle before breaking lower.Published in News & Analysis