Daily Forex News and Watchlist: GBP/USD

Is risk appetite returning to the markets?

If so, could this mean another leg lower for the safe-haven dollar in the next session?

Before moving on, ICYMI, yesterday’s watchlist explored CAD/JPY’s consolidation ahead of the BOC decision. 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:

BOC hiked interest rates from 3.75% to 4.25% as expected

EIA crude oil inventories fell by 5.2M barrels vs. projected reduction of 3.5M barrels

U.K. RICS survey showed most widespread drop in house prices since May 2020

Japan’s Economy Watchers sentiment index down from 49.9 to 48.1 in Nov

Shanghai to remove COVID test requirement for food and entertainment venues

Hong Kong loosening up COVID restrictions on isolation and masking

Upcoming Potential Catalysts on the Forex Economic Calendar:

SNB official Maechler’s speech at 2:30 pm GMT
New Zealand quarterly manufacturing sales at 9:45 pm GMT
Chinese CPI and PPI y/y at 1:30 am GMT (Dec. 9)

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

What to Watch: GBP/USD

The coast is clear in terms of top-tier economic releases today!

Can risk assets keep banking on looser COVID restrictions in China?

So far, the safe-haven dollar seems to be returning some of its latest winnings, as investors are once again getting their hopes up about China’s reopening.

After all, the country announced that they’d be easing up their testing and isolation requirements in some cities like Shanghai. Now that’s quite a turnaround from their tight lockdowns earlier on!

If this keeps up, the U.S. dollar could keep giving up ground against its peers, including the British pound. Don’t forget that the U.K. economy printed a few green shoots earlier this month, particularly from the business and consumer sectors.

In that case, GBP/USD could be poised to resume its climb from here, setting its sights back on the channel top close to the 1.4500 major psychological resistance.

The 50% Fib that lines up with the 200 SMA seems to have held as support, but a larger correction could still trigger a dip to the 61.8% Fib closer to the channel support.

Stochastic has a bit of room to head south before reaching the oversold region to signal exhaustion among sellers, so the pullback might keep going.

Just make sure you keep tabs on headlines that impact market sentiment when trading this one!