GBPUSD looking for a breakout after a strong day
Gary Christie November 5, 2020 5:04 PM
Key resistance at 1.3185 is being tested after the BoE increases asset purchase program and holds int rates steady.
The US Dollar was bearish against all of its major pairs on Thursday. On the US economic data front, Initial Jobless Claims dropped to 751K for the week ending October 31st (735K expected), from a revised 758K in the week before. Continuing Claims fell to 7,285K for the week ending October 24th (7,200K expected), from a revised 7,823K in the prior week. Finally, the Federal Open Market Committee (FOMC) kept the Federal Funds Target Rate between 0.00% and 0.25%, as expected.
On Friday, Change in Nonfarm Payrolls for October are expected to decline to 600K on month, from 661K in September. The Unemployment Rate for October is expected to fall to 7.6% on month, from 7.9% in September. Finally, Wholesale Inventories for the September final reading are expected to slip 0.1% on month, in line with the September preliminary reading.
The Euro was bearish against most of its major pairs with the exception of the CAD, CHF and USD. In Europe, the European Commission has indicated that it anticipates that the decline in GDP for the euro zone in 2020 will be 7.8%, a better figure than the 8.7% previously expected. Yet, the rebound in GDP expected for 2021 has been significantly revised lower from 6.1% to 4.2%. Separately, euro zone retail sales declined by 2.0% in September vs a 1.5% decline expected and after an increase of 4.2% in August (revised from +4.4%). The Bank of England (BoE) decided to keep interest rates on hold at 0.10% as expected. BoE announced an increase of 150 billion pounds in its asset repurchase program, bringing it to 895 billion pounds to cope with the negative consequences of the second lockdown. Also, in Germany, industrial orders only rose 0.5% in September while +2.0% was expected and after a 4.9% increase in August (revised from +4.5%). In addition, the PMI construction index fell to 45.2 in October from 45.5 the previous month. In Great Britain, the PMI Construction Index fell to 53.1 in October from 56.8 the previous month and 55.0 expected.
The Australian dollar was bullish against all of its major pairs.
Looking at the largest movers, the GBP/USD jumped 152 pips to 1.314 in Thursday's trading. A rising trend line remains in play. Support can be seen at the 1.2845 level. Look for a continuation higher and the uptrend to continue towards Dec highs around the 1.351 level if the pair can break above short term resistance at 1.3185.
Source: GAIN Capital, TradingView
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