The BOE is making policy announcements today while Uncle Sam is set to print a closely watched weekly jobless claims data. Will today’s events make or break GBP/USD’s range?
Fresh Market Headlines & Economic Data:
- Swiss National Bank sets up covid-19 refinancing facility
- South Korea to relax FX liquidity rules for banks for 3 months, deploy FX reserves
- Asian markets cautiously await U.S. stimulus, jobs
- Singapore flags deep recession as coronavirus shrinks economy in Q1
- Dollar falls before jobless claims, investors await stimulus
- ECB will not apply issuer limit in new crisis fighting QE
- U.S. Senate passes $2T disaster aid bill
- RBA extends government bond purchasing program
Upcoming Potential Catalysts on the Economic Calendar:
- Germany’s GfK consumer climate at 7:00 am GMT
- U.K.’s retail sales at 7:00 am GMT
- ECB’s economic bulletin at 9:00 am GMT
- BOE’s monetary policy announcement at 12:00 pm GMT
- U.S. unemployment claims at 12:30 pm GMT
- U.S. final GDP reading at 12:30 pm GMT
What to Watch: GBP/USD
The dollar had a mixed session earlier today. Anticipation of the approval of a $2 trillion stimulus bill in the U.S. failed to energize the comdolls as USD gained against AUD, CAD, and NZD. The dollar lost pips against EUR, CHF, and JPY, however.
Meanwhile, GBP/USD traded on a tight range. The pair is now trading just under a range resistance that happens to line up with the 200 SMA on the 1-hour chart.After cutting its rates to an all-time low of 0.10% and with a newly-minted Governor, markets aren’t expecting any new measures from the Bank of England (BOE) this week beyond some form of forward guidance.
Meanwhile, traders are watching Uncle Sam’s weekly jobless claims data. Word around is that it could reach as high as 4 MILLION after the first round of COVID-19 related layoffs have been recorded.
If the jobless claims print much higher than the markets’ already high expectations, then traders could question the effectiveness of the latest stimulus measures and inspire a bit of risk aversion across the board.
GBP/USD could bounce from its range resistance and target its previous lows near 1.1450.
If the BOE inspires confidence in the markets, however, or if Uncle Sam’s results gets traders to take risks, then we could see Cable pop firmly above the 200 SMA and maybe head towards areas of interest like 1.2010 or 1.2125.