It has been a big day for the UK markets as the recent bank stress test showcased some underlying weakness but nothing that could really hurt the system, in addition to this we saw manufacturing data come out for the UK. This is never as big as the services sector so it should be taken with a grain of salt, but it showed modest expansion coming in at 52.7 (53.8 exp). Despite all of this it was downward pressure that  was weighing on the pound but USD weakness saw a rise in the GBPUSD which is looking very interesting now as a result.

Previous movements higher in the GBPUSD have faced pressure, as the bearish trend has taken hold over the past month and we saw a drop to strong support at 1.5029 recently. But this level held up extremely well under the pressure, and we have seen a strong bullish rush higher. The threat here for the bulls is the 20 MA on the D1 which has so far been acting as dynamic resistance for cable traders.  Resistance levels at 1.5164 are certainly a big level for most traders and this will open up the opportunity for profit taking if the 20 MA fails. Any higher and you're looking at the trend line that has so far been in play for a number of months.

The US markets were as mentioned above a real point of weakness in late day trading as the ISM manufacturing PMI slipped to 48.6 showing some contraction back in the US markets. Many will be watching this and hoping it's not a sign of things to come, which it could very well be given the mixed signal the market has had over the US. However, focus is still on the FED and any wording coming out from FED members who may offer clues as to if a rate hike is on the horizon. Certainly inflation data has so far suggested otherwise and I am inclined to believe that it will likely be in next year given the dovish nature of the FED.

This uncertainty can be seen in the S&P 500 where it has been sluggish when it comes to movements in the past few weeks. The lack of a serious catalyst for movements has failed to enable to the S&P 500 to make any serious ground when it comes to tackling resistance at 2103, and if we do see a dovish fed we could see the S&P bulls look to rocket past this level and retest 2128 for risk appetite in the marketplace.

Lastly, Australian GDP data is out shortly and the AUDUSD continues to be very volatile. Today's jump on the back of no rate cut and a weaker USD has certainly bolstered the AUDUSD but GDP due out shortly could be a hard ask for a positive result, especially given the pullback in capex spending as of late. Traders will be looking for resistance levels at 0.7361 and 0.7421 if there is a breakout higher.

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