The GBPUSD has hit a weekly high at 1.5246 despite the Sterling momentarily depreciating across the global currency markets following a mixed reaction to Wednesday’s UK labor report. Although the UK unemployment rate fell to its lowest level since April 2008 at 5.3%, both the claimant count and average weekly earnings failed to meet expectations. The mixed report unearthed some concerns which market participants currently have about a potential slowdown in economic momentum in the UK economy and adds to why the Bank of England (BoE) are clearly reluctant to begin raising UK interest rates. With the BoE remaining hesitant towards committing itself to raising UK interest rates, the recent bounce in the GBPUSD could just be a relief rally and will possibly conclude around the 1.52 area.
Looking at the daily timeframe the GBPUSD still remains technically bearish with prices finding some resistance below the daily 20 and 200 SMA. The 1.52 area is also below the 38.2 Fibonacci retracement level and may offer an opportunity for sterling bears to take control once more. A strong daily close back below the 1.52 level may invite a further decline towards the 1.51 support.
Later today Mario Draghi will be speaking in Brussels and the markets will be keeping a close eye on any hints regarding the possibility of the European Central Bank (ECB) easing monetary policy once again in December. The economic sentiment in Europe remains as bleak as ever, and the continuation of soft economic data from Europe this month has left the pressure on the ECB to do more to reinvigorate growth. With falling commodity prices and emerging market weakness sabotaging the ECB’s 2% medium term inflation target, the pressure is mounting on the ECB to act.
The combination of a possible dovish tone from ECB President Mario Draghi and the complete contrast in both economic and monetary sentiment between the US and Europe makes the EURUSD technically bearish. If expectations continue to grow that the ECB may implement further QE in the near future, the EURUSD may decline down towards support around 1.05. Looking at the daily timeframe the EURUSD is heavily bearish with consistent lower lows and lower highs created. Prices are well below the 20, 50 and 200 Simple moving averages and the MACD has crossed to the downside. The previous support at 1.08 may be used as dynamic resistance to encourage a further decline back towards the 1.05 level.
Commodity spotlight – Gold
Gold continues to remain depressed on the renewed optimism that the Federal Reserve could begin raising US interest rates in December and unless this changes, Gold is potentially vulnerable to further losses. The precious metal is technically bearish on the Daily timeframe and previous support at 1100 may be used as dynamic resistance to encourage a further decline back towards the 1080 level. Lagging indicators such as the Bollinger bands have started to expand with prices riding the outer skins of the second standard deviation. A breakdown below the 1080 support might motivate traders to begin pricing in an eventual decline towards 1000.
The AUDNZD is technically bullish on the daily timeframe. Prices have crossed above the daily 20 SMA and the MACD is in the process of trading to the upside. As long as prices can keep above the 1.0730 support, a breakout above 1.0900 should open a path to the next relevant level at 1.1050.
The EURGBP is technically bearish on the daily timeframe. Prices are below the 20 and 200 simple moving averages and the MACD is deep in the downside. A breakdown below the 0.7050 level should invite a further decline to 0.6950.
This pair experienced a breakout above the 0.7150 resistance in the earlier sessions today, and a solid daily close above this resistance may open a path to the 0.7300 level. The daily 20 SMA has provided support for the AUDCHF and as long as prices can keep above the 0.7050 level, this pair remains bullish.
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