There are a few mid-tier reports lined up from the U.K. today, and downbeat results could allow this range resistance to hold.
Where are pound bears hanging out?
Before we talk setups, let me list down the top headlines that markets saw in the last couple of hours:
- U.S. President-elect Biden calls for $1,400 in stimulus checks under $1.9 trillion rescue package
- Fed head Powell talks about keeping interest rates low for much longer
- Japanese tertiary industry activity fell by 0.7% instead of projected 0.3% uptick
- New Zealand food price index saw 0.1% uptick after earlier 0.9% drop
- China may allow some imports of Australian coal
Upcoming Potential Catalysts on the Economic Calendar:
- 8:00 am GMT: U.K. industrial production, monthly GDP, and goods trade balance
- 11:00 am GMT: Euro zone trade balance
What to Watch: GBP/NZD
This pair has been moving sideways inside a range visible on its short-term time frames. Price has found support around 1.8630 and looks ready to test resistance near the 1.9100 mark.
Risk assets like commodity currencies could be on stronger footing over the next trading sessions, as President-elect Biden just called for a $1.9 trillion aid plan that involves $1,400 in stimulus checks.Meanwhile, the U.K. is scheduled to print its November GDP reading and might show a whopping 4.6% contraction in economic activity for the month.
Weaker than expected results might lead to a dip back to the range bottom while strong figures could see a short-lived rally. After all, the U.K. went into tighter lockdown mode in late 2020 as the new strain of the COVID-19 virus emerged.
It’s not exactly the most exciting day of the week for this pair, but it could still move by a decent 80 pips based on the average GBP/NZD volatility.