It’s make or break for GBP/USD traders while the pair hangs out near a short-term inflection point!
Will the pair extend its trend? Or are we in for a bullish reversal?
Before moving on, ICYMI, I’ve listed the potential economic catalysts that you need to watch out for this week. Check them out before you place your first trades today!
And now for the headlines that rocked the markets in the last trading sessions:
Fresh Market Headlines & Economic Data:
Over the weekend, China’s CPI showed a 0.5% m/m dip in November (-0.1% forecast, -0.2% previous) while PPI sank 3.0% y/y for the month (-2.8% forecast, -2.6% previous)
Sentiment among Japan’s large manufacturers improved, with the Business Survey Index rising from 5.4 to 5.7 in Q4
U.K.’s Rightmove house price index in December: -1.9% m/m (-1.7% m/m previous)
Bloomberg cited “people familiar with the matter” and said that the BOJ officials “see little need to rush” into scrapping its negative interest rate policies
Price Action News
Overlay of JPY vs. Major Currencies Chart by TradingView
The Japanese yen was the biggest mover (and the biggest loser) during the Asian and early European sessions as traders scaled back on their hawkish BOJ bets.
The safe haven probably lost pips at the start of the day on cautious risk-taking and a bit of profit-taking from late last week’s strong bullish moves.
JPY bears upped their game during the early European session after Bloomberg published a report citing “people familiar with the matter” who said that BOJ members are in no rush to exit from their negative interest rate policies.
The yen is in the red across the board and is currently weakest against GBP and CHF while clocking in the least losses against AUD and NZD.
Upcoming Potential Catalysts on the Economic Calendar:
New Zealand’s visitor arrivals at 9:45 pm GMT
RBA Gov. Bullock to give a speech at 10:20 pm GMT
Australia’s Westpac consumer sentiment at 11:30 pm GMT
Japan’s PPI at 11:50 pm GMT
Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action! 🔥 🗺️
GBP/USD 15-min Forex Chart by TradingView
This week’s economic calendar may be busy but Monday promises to be relatively low key with not a lot of top-tier reports scheduled.
The closest potential catalyst is the U.K.’s November labor market numbers, which could show more jobless claimants, lower average earnings, and an unemployment rate steady at 4.2%.
Weaker U.K. jobs numbers could encourage Bank of England (BOE) rate cut speculations that would weigh on the British pound.
GBP/USD, which is trading 50 pips from its Friday lows, could draw in fresh selling pressure.
And why not? The pair is already testing today’s Pivot Point (1.2550) line that happens to line up with a trend line resistance, Friday’s broken support level, AND the 100 and 200 SMAs in the 15-minute time frame.
More interest rate cut bets for the BOE could extend GBP/USD’s downtrend and drag the pair back down to the 1.2500 psychological level near the S1 Pivot Point.
Of course, any bearish momentum would depend on today’s overall market themes. If traders adopt a cautious risk-taking mood, then GBP/USD could trade above its trend line resistance.
But if we see more profit-taking or risk aversion ahead of this week’s top-tier events, then GBP/USD may more likely attract sellers that could drag the pair to new December lows.
What do you think? Can GBP/USD maintain its days-long downtrend?
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