Sentiment towards the Sterling received a crippling blow following the unexpected decline in October’s UK manufacturing output which has reinforced the growing concerns of a potential slowdown in economic momentum in the UK economy. This decline of -0.4% in October signals a weak start for the manufacturing industry in the fourth economic quarter and adds to the arsenal of factors that have provided the Bank of England with a compelling case to push back raising UK interest rates. Investor attraction towards the Sterling continues to be limited by the Bank of England’s clear reluctance to raise UK interest rates, and now with the UK manufacturing output on a potential route to declining further, sellers may be encouraged to attack the Sterling with aggression.

The GBPUSD received direct punishment with prices instantaneously burning through the 1.500 level as investors digested the fact that this decline in the UK manufacturing output may blur UK interest rate hike expectations. This pair was already bearish and bears have been installed with additional momentum which should encourage sellers to send prices back towards 1.4900. The ongoing fears about the UK economy have depressed the Sterling, and with expectations still elevated that the Fed may raise US interest rates for the first time in nearly 10 years next week, the GBPUSD remains open to further losses.

WTI Oil prices crashed to fresh 6 year lows at $37.50 as concerns over an aggressive oversupply in the markets continued to haunt investor sentiment. OPEC’s decision to keep production levels unchanged has left a mark which may open the gates to WTI Oil trading to an extremely low level, the likes of which has been not seen in almost eight years. Prices remain fundamentally bearish and the ongoing indications that the OPEC is willing to leave production levels unchanged despite the excessive oversupply in the hope of regaining market share will leave the price vulnerable to further losses.

From a technical standpoint, WTI is heavily bearish on the daily timeframe and the breakout below the $39 support may encourage sellers to send prices towards $36.50. Prices are trading below the daily 20 SMA and the MACD has crossed to the downside. The previous $39 support may become a dynamic resistance which should assist the potential decline lower.

GBPNZD

The GBPNZD is technically bearish on the daily timeframe. Prices are trading below the daily 20 SMA and the MACD has crossed to the downside. A breakdown below 2.23 which is also coincidentally below the daily 200 SMA may invite an opportunity for a further decline towards 2.170.

USDCNH

This pair is technically bullish on the daily timeframe. Prices are trading above the daily 20 SMA and the MACD has crossed to the upside. A breakout above the 6.500 resistance may invite an opportunity for a further appreciation to 6.530.

SILVER

This commodity is technically bearish on the daily timeframe. A breakdown below $14.00 may invite an opportunity for a further decline back down towards $13.90.

 

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