GBP/USD looking to break out of consolidation
Gary Christie December 16, 2020 4:29 PM
Increased volatility is anticipated around BoE rate decision: Chart
The US Dollar was bearish against most of its major pairs on Wednesday with the exception of the CAD and CHF. On the US economic data front, the Mortgage Bankers Association's Mortgage Applications rose 1.1% for the week ending December 11th, compared to -1.2% in the previous week. Retail Sales Advance dropped 1.1% on month in November (-0.3% expected), compared to a revised -0.1% in October. Markit's US Manufacturing Purchasing Managers' Index slipped to 56.5 on month in the December preliminary reading (55.8 expected), from 56.7 in the November final reading. Finally, the Federal Open Market Committee (FOMC) decided to keep the Federal Funds Target Rate between 0.00% and 0.25%, as expected.
On Thursday, Housing Starts for November are expected to increase to 1,535K on month, from 1,530K in October. Initial Jobless Claims for the week ending December 12th are expected to fall to 813K, from 853K in the week before. Finally, Continuing Claims for the week ending December 5th are expected to decrease to 5,700K, from 5,757K in the prior week.
The Euro was bullish against all of its major pairs. In the UK., official data on consumer prices was released at +0.3% (vs +0.6% on year in November expected). Also, the December Markit Manufacturing Purchasing Managers' Index (preliminary reading) was reported for Eurozone at 55.5 (vs 52.9 expected) and for the U.K. at 57.3 (vs 55.5 expected).The December Markit Manufacturing PMI (preliminary reading) Services PMI was published for Eurozone at 47.3 (vs 41.5 expected) and for the UK. at 48.9 (vs 50.9 expected).
The Australian dollar was bullish against most of its major pairs with the exception of the GBP and EUR.
Looking at the GBP/USD ahead of the BoE rate decision where the rate is anticipated to hold at 0.1%, we have measured an average of 132 pips of volatility in the 4 hours after past BoE rate decisions which could present interesting trading opportunities Thursday. On a daily chart, the pair is attempting to break above a long term resistance level at 1.3535. If a breakout finally happens, traders can look towards 13378 as a first target. A break below support at 1.308 could pressure the pair down to the lower Bollinger band near 1.2765.
Source: GAIN Capital, TradingView
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