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Yo, Cable is retesting its 1.1500 major psychological handle!

Will the retest lead to GBP/USD extending its downtrend?

Before moving on, ICYMI, yesterday’s watchlist looked at a potential break and retest play on EUR/GBP ahead of Eurozone’s retail sales report. Be sure to check out if it’s still a valid play!

And now for the headlines that rocked the markets in the last trading sessions:

Fresh Market Headlines & Economic Data:

Crypto giant Binance agrees to buy rival FTX amid ‘liquidity crunch’

Elon Musk sells 19.5 million Tesla shares worth almost $4B

Japan’s bank lending up by 2.7% y/y in October, higher than 2.3% uptick in September

Reuters Tankan manufacturing sentiment index down from 5 to 2 in November, the lowest reading since January 2021

China’s producer prices down by 1.3% y/y, its first decline since December 2020, due to COVID controls

China’s inflation up by 2.1% y/y vs. 2.4% gain expected in October

Beijing Covid cases hit five-month high; Guangzhou locks down a second district

Australia’s building permits down by 5.8% m/m in September after a 23.1% jump in August

Australia’s house approvals plunge by 7.8% m/m in September after a 4.8% increase in August

Oil prices lower on larger-than-expected U.S. inventories build, China’s COVID concerns

Upcoming Potential Catalysts on the Forex Economic Calendar:

RBA Deputy Governor Michele Bullock to give a speech at 9:05 am GMT
US EIA crude oil inventories at 3:30 pm GMT
AU MI inflation expectations at 12:00 am GMT (Nov 10)
Japan’s preliminary machine tool orders at 6:00 am GMT (Nov 10)

Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action! 🔥 🗺️

What to Watch: GBP/USD

GBP/USD Daily Forex Chart

GBP/USD Daily Forex Chart

I’m not seeing top-tier reports scheduled for today so the forex scene will likely take its cues from overall risk sentiment.

Jitters about global economic slowdown resurfaced during the Asian session as traders worried about China extending its COVID controls and affecting the growth momentum of the world’s second largest economy.

Meanwhile, some traders are staying in the sidelines ahead of the U.S. midterm election results. A split government could result in a bullish market as it reduces the chances of increased regulations (especially in tech) and government spending that could further increase inflation.

A risk-averse trading environment could drag GBP lower against USD. Heck, technicals are already favoring the bears!

GBP/USD is hanging out near the 1.1500 psychological handle that lines up with the 61.8% Fibonacci retracement of August and September’s downswing.

1.1500 is also near the daily chart’s 100 SMA AND the trend line resistance that’s been solid since February.

Depending on the momentum, a downswing could drag GBP/USD down to the 1.1300 or 1.1150 previous inflection points.

Meanwhile, continued risk-taking or USD-selling just might bust GBP/USD from its trend line resistance.

Watch out for a strong break above 1.1500 that could push Cable to the 1.1800 or 1.2100 previous areas of interest!