Now that the Democrats have taken the House and may tie with the GOP for Senate control, we can get back to economic data. I think a lot of traders have stayed on the sidelines to avoid the choppy markets that the mid-term elections and lack of data have produced. We have a couple of significant events coming up with the Bank of England rate decision and the US Trade Balance report.

The market is expecting the BoE to raise rates to 5.00% amidst the recent strength in economic data. This notion has been already priced into the pair, what traders will be focusing on is the language of the BoE after the announcement. Will there be another rate hike to 5.25% soon after? That’s the question of the day. I think with the long bull run in GBP/USD, profit taking off of this data is a great opportunity to short the pair.

Soon after the BoE decision, we have US Trade Balance number at 8:30 am EST. Consensus is at -66.0B versus the previous number of -69.9B. If you recall last month, the Trade Balance number came out way worse than expected and the USD shot up! Tomorrow’s release may be better than expected with lower oil prices factored in.

So, we’re looking for a short tomorrow, so here’s a trade idea:

Short USD/CHF @ 1.8985, stop @ 1.9015, pt1 @ 1.8965, pt2 @ 1.8925

Good luck and good trading!