The Fed’s surprise cut may have weighed on the dollar, but word through the forex grapevine is that the BOE is under pressure to ease also. That’s why I’m looking at this Cable setup!
Fresh Market Headlines & Economic Data:
- Australian trade surplus narrowed from 5.38B AUD to 5.21B AUD vs. 4.80B AUD forecast
- Asian shares see some upside, but rallies limited by virus fears
- Oil edges higher on expectations of more OPEC cuts
- California declared state of emergency over coronavirus
- Fed Beige Book reports first negative impact of coronavirus on U.S. economy
Upcoming Potential Catalysts on the Forex Calendar:
- OPEC meetings taking place
- U.S. Challenger job cuts at 12:30 pm GMT
- BOE MPC member Haldane’s speech at 1:00 pm GMT
What to Watch: GBP/USD
Now that the Fed already pulled the trigger on an emergency rate cut, the spotlight has turned to other major central banks who might need to resort to additional stimulus as well.
In particular, analysts have their eyes on the ECB and BOE since both are facing Brexit-related risks on top of the economic repercussions of the coronavirus outbreak.Cable is stalling at a former support around around 1.2875 that lines up with the 50% Fib retracement level on the latest slide. This also happens to coincide with the 200 SMA dynamic resistance that could add to its strength as a ceiling.
There are no major reports lined up from the U.K. economy in the London session, so traders could pay closer attention to what BOE MPC member Haldane has to say about the current situation.
Besides, a return in risk-off flows could still benefit the safe-haven dollar versus sterling. A short play at current levels with a stop past the highest Fib and a target at the swing low could catch a flight to safety.
If you’re not sure where to place your stops or your profit targets, then you’ll want to check out MarketMilk’s GBP/USD volatility analysis for clues.