GBPUSD looking for a breakout after a strong day

Key resistance at 1.3185 is being tested after the BoE increases asset purchase program and holds int rates steady.

UK

The US Dollar was bearish against all of its major pairs on Thursday. On the US economic data front, Initial Jobless Claims dropped to 751K for the week ending October 31st (735K expected), from a revised 758K in the week before. Continuing Claims fell to 7,285K for the week ending October 24th (7,200K expected), from a revised 7,823K in the prior week. Finally, the Federal Open Market Committee (FOMC) kept the Federal Funds Target Rate between 0.00% and 0.25%, as expected. 

On Friday, Change in Nonfarm Payrolls for October are expected to decline to 600K on month, from 661K in September. The Unemployment Rate for October is expected to fall to 7.6% on month, from 7.9% in September. Finally, Wholesale Inventories for the September final reading are expected to slip 0.1% on month, in line with the September preliminary reading.       

The Euro was bearish against most of its major pairs with the exception of the CAD, CHF and USD. In Europe, the European Commission has indicated that it anticipates that the decline in GDP for the euro zone in 2020 will be 7.8%, a better figure than the 8.7% previously expected. Yet, the rebound in GDP expected for 2021 has been significantly revised lower from 6.1% to 4.2%. Separately, euro zone retail sales declined by 2.0% in September vs a 1.5% decline expected and after an increase of 4.2% in August (revised from +4.4%). The Bank of England (BoE) decided to keep interest rates on hold at 0.10% as expected. BoE announced an increase of 150 billion pounds in its asset repurchase program, bringing it to 895 billion pounds to cope with the negative consequences of the second lockdown. Also, in Germany, industrial orders only rose 0.5% in September while +2.0% was expected and after a 4.9% increase in August (revised from +4.5%). In addition, the PMI construction index fell to 45.2 in October from 45.5 the previous month. In Great Britain, the PMI Construction Index fell to 53.1 in October from 56.8 the previous month and 55.0 expected.

The Australian dollar was bullish against all of its major pairs. 

Looking at the largest movers, the GBP/USD jumped 152 pips to 1.314 in Thursday's trading. A rising trend line remains in play. Support can be seen at the 1.2845 level. Look for a continuation higher and the uptrend to continue towards Dec highs around the 1.351 level if the pair can break above short term resistance at 1.3185. 



Source: GAIN Capital, TradingView

More from Forex

Join our live webinars for the latest analysis and trading ideas. Register now

GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.