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Without major catalysts expected ahead, we’re checking out a technical setup in GBP/NZD, a pair that could return to its steady downtrend after today’s bounce.

Before moving on, ICYMI, today’s Daily London Session Watchlist looked at an opportunity forming on GBP/USD as Brexit talks develop, so be sure to check that out to see if there is still a potential play!

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Fresh Market Headlines & Economic Data:

S&P, Dow futures retreat as coronavirus cases spike

Oil falls back on tightening restrictions despite OPEC+ hopes

U.S. manufacturing output picks up in October

U.S. retail sales miss expectations in October

U.S. import prices unexpectedly fall in October

U.S. Homebuilder confidence in November shatters record high, as buyers keep fleeing for the suburbs

Canada housing starts up in October on more detached units: CMHC

Canadian wholesale sales grew 0.9% to $66.2B in September, higher than February’s pre-COVID-19 level for the third straight month.

ECB’s Lane Pledges Cheap Credit as Long as Pandemic Crisis Lasts

British PM tells ministers an EU deal is far from certain

Upcoming Potential Catalysts on the Economic Calendar

BOE Ramsden speech at 5:00 pm GMT
Fed Bostic speech at 6:00 pm GMT
Fed Daly speech at 6:25 pm GMT
BOC Governor Macklem speech at 7:00 pm GMT
Fed Williams speech at 7:00 pm GMT
Fed Bostic speech at 7:35 pm GMT
U.S. Net Long-term Tic flows at 9:00 pm GMT
API Crude oil stock change at 9:30 pm GMT
RBA Governor Lowe speech at 10:00 pm GMT
Japan Trade Balance at 11:50 pm GMT
Australia New Home sales at 12:00 am GMT (Nov. 18)
Australia Leading Index, Wage Price Index at 12:30 am GMT (Nov. 18)

What to Watch: GBP/NZD

GBP/NZD 1-Hour Forex Chart
GBP/NZD 1-Hour Forex Chart

Even though we do have plenty of speeches from central bankers and economic data ahead, there’s low expectations they’ll turn out to be significant market movers for the next session or two.

So, we’re checking out technical setups this morning, focusing on the one hour chart of GBP/NZD. We can see above that the pair has been on a steady downtrend since the beginning of November, likely on the shift in speculation bias of potential negative rates coming for New Zealand, and likely continued uncertainty with Brexit negotiations. It’s also likely that the recent positive headlines regarding COVID vaccines have been more beneficial to the Kiwi than the British pound.

But today we saw a bounce in the pair, likely on prospects that we’ll get a Brexit deal next week (will we really though?) and possibly on the turn in broad risk sentiment as COVID cases spike higher in Europe and the U.S. The question now is whether this is enough to change the direction of the overall trend lower?

Of course we won’t know until we know, but for now, the odds are that the downtrend will continue as the renewed lockdown actions will likely lead to a slowdown in cases, and we could see more positive headlines from the vaccine/therapy front turn global risk sentiment back to positive.

If you’re that camp, then this bounce could be an opportunity to play these themes, especially as the pair retests the falling ‘highs’ and signals potential overbought conditions. If this area holds and bearish momentum picks up, that could be the start of a new swing move lower and traders may aim past that double bottom pattern at the 1.9100 handle.

If you’re in the camp that sees the market focusing more on the rising COVID cases and the economic damage that may come from renewed restrictions, PLUS a Brexit deal coming next week, then watch for a break above the minor resistance area around 1.9300 before considering a long swing position.