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We’re checking out GBP/USD to start the new week as the pair takes a step back from its recent uptrend. Will the bulls buy back in soon?

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Fresh Market Headlines & Economic Data:

Wall Street opens higher as vaccine progress fuels recovery hopes

Trump administration drafts list of 89 Chinese firms with alleged military ties

U.S. Recovery gains further momentum with hiring at all-time high

Canada October wholesale sales seen up 0.9%: StatsCan flash estimate

Flash Eurozone PMI signals steep downturn in November amid COVID-19 lockdowns

German PMI drops to five-month low in November due to tightening of COVID-19 restrictions, but economy remains buoyed by manufacturing

Sharp decline in French business activity amid fresh COVID-19 lockdown

Flash PMI signals renewed economic decline as UK endures second lockdown

EU’s Barnier says “fundamental divergences” persist in UK trade talks

UK orders health service to be ready for vaccine by December

Irish PM breaks cover to say EU could reach UK agreement in DAYS

Australia Flash Composite PMI: Private sector growth accelerates in November, led by services

New Zealand Dollar scales 2-yr top as retail recovery shatters records

Japanese private sector economy struggles to gain recovery momentum

Upcoming Potential Catalysts on the Economic Calendar

Fed Daly speech at 6:00 pm GMT
BOC Gravelle speech at 7:00 pm GMT
Fed Evans speech at 8:00 pm GMT
RBA Debelle speech at 9:30 pm GMT
German GDP at 2:00 am GMT (Nov. 24)

What to Watch: GBP/USD

GBP/USD 1-Hour Forex Chart
GBP/USD 1-Hour Forex Chart

Solid moves in both the British pound and U.S. dollar to start the week, makes for a solid setup on GBP/USD for a potential short-term or swing trade. Sterling is riding higher on positive Brexit vibes, with speculation of a deal potentially coming this week. While the Greenback is also making gains after the latest Flash PMI data from the U.S. showed strong optimism in November, likely on the prospects of a vaccine coming soon. But will these latest catalysts only have short-term affects?

Well, with cases still rapidly rising and likely to influence the economic outlook as lockdown protocols make a comeback, the PMI sentiment may be short-lived. And Brexit is always a crapshoot based on years of lots of talk but no final actions, but odds are we’ll see a deal eventually.

So, odds are today’s headlines may be short-lived, and the recent driving theme of positive vaccine/recovery speculation could continue to put pressure on the Greenback once again, and we’ll see a GBP/USD move broadly higher over time.

With that in mind, the odds are in favor of the bulls at the moment, and with this pullback, the price action to watch out for is bullish reversal patterns at potential support areas.

We’re checking out the 1.3300 handle for those patterns as it was a previously broken resistance level, and a current Fibonacci retracement level. If bullish patterns emerge, then we may consider playing the uptrend, especially if the fundamentals / headlines continue to support it.

If this area is retested but is broken, then we will consider today’s news as a catalyst for a potential shift in trend. If so, then we’ll watch out for a break in the rising ‘lows’ pattern and Fibonacci retracement area before considering a short position. If it does break and resistance forms around the 1.3250 – 1.3300 handles, consider a potential swing position as this current trading area (1.3200 – 1.3500) is a major resistance area on the higher time frames.