GBPUSD Forecast: Brexit, FED and BoE Monetary Policy Ahead
Fundamentals:
UK Week Ahead: Following FED’s Rate Hike Decision and FOMC Statement on Wednesday, BoE’s Rate Hike decision will be announced on Thursday. In the UK, the focus remains on Brexit and market players don’t expect major changes to the policy signals from the Bank of England.
Major Macroeconomic Calendar of Sterling:
Wednesday – Inflation Data
Thursday – Retail Sales and BoE Rate Hike Decision
Friday: GDP Data
The markets disregarded the macro news of UK wages rising above expectations.
It is the Brexit and politics which drives the GBP crosses. The UK Prime Minister Theresa May won the Conservative party backing with a narrow 200-117 vote but faced the reluctance of European leaders to renegotiate the Brexit deal at the summit. The main problem is that there is no majority for anything in the House of Commons. The UK House of Commons goes on Christmas holiday on Thursday and returns on 7 January
US Week Ahead: Wednesday; FED’s rate hike decision and FOMC Statement will be announced. It is widely expected a rate hike from FED that should bring the overnight target range to 2.25%–2.50%. The key outcome of the post-rate decision press conference is the economic and the monetary policy outlook Powell is going to pursue. If the Fed chairman indicates a pause in the rate hiking cycle now, a decline in DXY and Dollar Sell-off may start.
Some market participants think that current US growth rates are not sustainable. They see that cooling investment, fading fiscal stimulus, and Federal Reserve tightening are likely to drive a slowdown -but not a recession-
At the same time, tighter monetary policy will increasingly dampen demand-side pressures, reducing the pricing power of businesses. As such, markets continue to expect core services inflation to pick up somewhat, but not to the degree that it leads to a material rise in inflation expectations that causes alarm at the Fed.
So that’s the key reason that drives market players into suspicious mode about the further FED rate hikes. The main idea is ” FED will pause”
We will see what the future will bring…
Major Macroeconomic Calendar of USD:
Wednesday – Home Sales Data and FED’s Rate Hike + FOMC Statement
Thursday – Initial Jobless Claims and Philadelphia Fed Manufacturing Index
Friday – Core Durable Goods Orders, GDP (QoQ) (Q3) and Personal Spendings Data
Technically:
After breaking down the triangle zone and key support at 1.26800, Cable tested 1.24750 marked by Fibonacci 1.13 Extension of Bearish XA Leg that started with Brexit. GBP Bulls did not let Cable to break below 1.24750 and we saw the pair’s retracement towards the broken triangle. However, pending sell orders started to work at 1.26800 and the pair ended the week at 1.25800.
On the downside, 1.24750 stands as a key support. A firm daily closing below 1.24750 may open the gates to 1.22100 Fibonacci 1.27 extension. A major support resides at 1.23750 between two extension levels.
On the upside, 1.26800 – 1.27000 is the key resistance level. The midterm bullish move may start if GBPUSD makes daily closing above 1.27000 however the targets are limited by EMA 50 @ 1.28170 and MA 100 @ 1.29300 on the daily chart.
Intraday Overview:
We have published a setup and we reached our targets. - see attached -
A few patterns are being printed on the smaller chart timeframes and we will publish the intraday trade setups for the members as soon as we get the confirmation on the charts.
UK Week Ahead: Following FED’s Rate Hike Decision and FOMC Statement on Wednesday, BoE’s Rate Hike decision will be announced on Thursday. In the UK, the focus remains on Brexit and market players don’t expect major changes to the policy signals from the Bank of England.
Major Macroeconomic Calendar of Sterling:
Wednesday – Inflation Data
Thursday – Retail Sales and BoE Rate Hike Decision
Friday: GDP Data
The markets disregarded the macro news of UK wages rising above expectations.
It is the Brexit and politics which drives the GBP crosses. The UK Prime Minister Theresa May won the Conservative party backing with a narrow 200-117 vote but faced the reluctance of European leaders to renegotiate the Brexit deal at the summit. The main problem is that there is no majority for anything in the House of Commons. The UK House of Commons goes on Christmas holiday on Thursday and returns on 7 January
US Week Ahead: Wednesday; FED’s rate hike decision and FOMC Statement will be announced. It is widely expected a rate hike from FED that should bring the overnight target range to 2.25%–2.50%. The key outcome of the post-rate decision press conference is the economic and the monetary policy outlook Powell is going to pursue. If the Fed chairman indicates a pause in the rate hiking cycle now, a decline in DXY and Dollar Sell-off may start.
Some market participants think that current US growth rates are not sustainable. They see that cooling investment, fading fiscal stimulus, and Federal Reserve tightening are likely to drive a slowdown -but not a recession-
At the same time, tighter monetary policy will increasingly dampen demand-side pressures, reducing the pricing power of businesses. As such, markets continue to expect core services inflation to pick up somewhat, but not to the degree that it leads to a material rise in inflation expectations that causes alarm at the Fed.
So that’s the key reason that drives market players into suspicious mode about the further FED rate hikes. The main idea is ” FED will pause”
We will see what the future will bring…
Major Macroeconomic Calendar of USD:
Wednesday – Home Sales Data and FED’s Rate Hike + FOMC Statement
Thursday – Initial Jobless Claims and Philadelphia Fed Manufacturing Index
Friday – Core Durable Goods Orders, GDP (QoQ) (Q3) and Personal Spendings Data
Technically:
After breaking down the triangle zone and key support at 1.26800, Cable tested 1.24750 marked by Fibonacci 1.13 Extension of Bearish XA Leg that started with Brexit. GBP Bulls did not let Cable to break below 1.24750 and we saw the pair’s retracement towards the broken triangle. However, pending sell orders started to work at 1.26800 and the pair ended the week at 1.25800.
On the downside, 1.24750 stands as a key support. A firm daily closing below 1.24750 may open the gates to 1.22100 Fibonacci 1.27 extension. A major support resides at 1.23750 between two extension levels.
On the upside, 1.26800 – 1.27000 is the key resistance level. The midterm bullish move may start if GBPUSD makes daily closing above 1.27000 however the targets are limited by EMA 50 @ 1.28170 and MA 100 @ 1.29300 on the daily chart.
Intraday Overview:
We have published a setup and we reached our targets. - see attached -
A few patterns are being printed on the smaller chart timeframes and we will publish the intraday trade setups for the members as soon as we get the confirmation on the charts.
Comment:
EURUSD Forecast:
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