The latest UK PMI data surprised the street with its solid strength. In contrast, EZ PMI was weaker than expected. On top of the UK PMI story, UK consumer price inflation and UK’s Retail sales were notched up. We can clearly see a data divergence between the EZ and UK; eventually, GBP enjoys the upper hand.
FX:
The pound has been showing a resilient trend across the G10 currencies. Last, the pound was up by 1.50% against the Aussie dollar and up by 1% against the EUR. Most of the GBP crosses were rallied nearly a percent vs. EUR underperformance against the same counterparts.
The picture shows a million words.
GBPUSD trading tad below the 13-year descending TL. A weekly and monthly closed > 1.3500 could ignite the longer-trend positive trend. The A-B-C pattern suggests 1.4100 are 1.4700 levels are coming. If you are a pound buyer, we request you to watch the cable closely.
Doctoring the pitch: #GBPUSD trading tad below to the 13-year descending TL.
A weekly and monthly closed > 1.3500 could ignite the longer-trend positive trend.
The A-B-C pattern suggests 1.4100 are 1.4700 levels are coming. #Brexit #UK #englisheconomy #fx #FX初心者 #FX pic.twitter.com/ejU0gJyaOI— KeytoMarkets (@KeytoMarkets) November 18, 2020
Momentum appears to have stalled.
Coming to our subject cross, the price action has been in a deceleration trend since mid-September. Now we are now finally tested the major support level. The series of bottoms in June, September, and November should now become support, and so if you are bullish EUR into November, then this is the place to take a long trade. Since June 2020, four times wheels kissed the ground at 0.8860.
But the price lost all the daily moving averages, and the 50MA on the weekly chart is under threat.
This week’s closing level is crucial, as the cross has been trending lower for three straight weeks. Since June 2020, the cross never fell more than three straight weeks. So, we remain neutral this week and will watch the trend closely.
Macro: UK’s manufacturing PMI was printed at a 3-month high, but the service sector dented further on the second lockdown in the UK.
Manufacturing production expanded at a robust pace during November, and the rate of growth accelerated since the previous month, HIS Markit said.
Looking ahead, empty economic calendar leaving traders sidelines. But we focus on EZ data. The return of EUR strength, which should allow the cross to perform better.
It is important to always keep in mind the risks involved in trading with leveraged instruments.
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