Two trades to watch: GBP/USD, Gold

GBP/USD tests 1.36 ahead of BoE quarterly report & US NFP. Gold eyes NFP.

GBP/USD tests 1.36 ahead of BoE quarterly report & US NFP

GBPUSD is edging lower testing 1.36 amid a mixed mood in the market. Chinese debt-ridden property sector and Brexit continue to weigh on sentiment.

Deadlock remains surrounding the Norther Ireland protocol with new proposals expected to be brought to the table.

The BoE will release its economic bulletin. Inflation has been a key theme across the week amid elevated energy prices, labour shortages & supply chain disruptions. The BoE said yesterday that the jump in inflation has been higher and more prolonged than expected

In the US all eyes will be on the US BFP. Lead indicators suggest that a solid report could be on the cards with just shy of 500k new jobs expected to be added.

A strong reading is likely to set expectations of the Fed tapering bond purchases.

What to expect from the NFP

Where next for GBP/USD?

GBPUSD has been extending its recovery from the late September low of 1.3412. However, the rebound has stalled around the 1.3650 this week, failing to retake the 20 sma.

A bullish crossover appears to be forming on the MACD. However, confirmation of a move higher would need to retake the 20 sma at 1.3650 in order to push on towards 1.37 round number and 1.3740 the 50 sma.

Meanwhile a move below 1.36 support brings 1.3575 into play and a potentially deeper selloff back towards 1.34.

GBPUSD Chart

Gold eyes NFP

Gold is picking up as the mood in the market sours. Concerns over China’s property sector have returned to haunt the market, driving safe have flows into both Gold, lifting the precious metal.

On the other hand, risk appetite improved with the passage of legislation of US debt ceiling extension is keeping the lid of any gains.

All eyes are on the NFP, which could drive expectations of the Fed’s next move.

A strong number could cement tapering expectation which is keeping buyers cautious.

What is the NFP?

Where next for Gold?

Gold failed to capitalise on the move after breaking out of the falling wedge. Instead, gains have been capped across the week by the 20 sma on the daily chart. Meanwhile the falling trendline resistance from the wedge has acted as a support.

The bullish cross over on the MACD is keeping buyer’s hopeful. A move over the 20 sma at 1761 is need to attack horizontal resistance at 1770, exposing the 50 sma at 1781.

On the flip side, a move below the support trendline at 1745 could open the door to a deeper selloff towards 1936 the September 24 low and then 1722 the September low.

 

 

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