GBP/USD – Sleepy Start for Pound as Drifting Continues
GBP/USD continues to trade sideways early in the week. In Monday’s European session, the pair is trading at 1.2860, up 0.07% on the day.
There are no major British indicators this week, but that shouldn’t lull traders into assuming it will be a sleepy week for the pound. The British general election is just over two weeks away, and new poll releases, as well as other developments, can quickly translate into volatility for the currency. A BBC poll released on Saturday gave the Conservatives 41% of the vote, followed by Labor at 29%. Given that the Conservatives are pro-business, a significant lead in the polls can be considered bullish for the pound.
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Pound Slips After Soft PMIs
GBP/USD was down considerably on Friday and ended the week in the red. This was a result of weak PMI releases, which are key gauges of the strength of the services and manufacturing sectors. The initial Manufacturing PMI release for November came in at 48.3, shy of the estimate of 48.8. The situation is only marginally better in the services sector. There wasn’t any relief from the initial Services PMI, which also contracted, with a reading of 48.6. This missed the forecast of 50.1 pts.
Technical Analysis
With GBP to USD sustaining considerable losses on Friday, the pair finds itself range-bound. There is support at 1.2800. Below, we have the 50-EMA line at 1.2756, immediately followed by support at 1.2750. On the upside, there is immediate resistance at 1.2910. This is followed by resistance at the symbolic number of 1.300.
Pacific Currencies – Forecast
USD/CNY
USD/CNY had a quiet week and is currently trading at 7.0300. On the technical side, the currency is flirting with resistance at 7.04, and a breakout could allow the pair to post significant gains.
AUD/USD
The trend is down for AUD/USD, which posted weekly losses for a third straight week. This trend could continue this week as well, as the markets are becoming frustrated as the U.S. and China still haven’t reached a trade deal.
NZD/USD
I am neutral towards NZD/USD, which has been showing sharp swings lately, but was unchanged last week. We could see some volatility from the pair later on Monday, as New Zealand releases retail sales reports.