Chart of the Day GBPUSD
GBPUSD: GBP saw a seven month high against the USD amid market speculation that UK PM Boris Johnson’s Conservative Party will win a clear majority at the 12 December polls and boost his Brexit agreement chances with the lawmakers. Decline in UK services activity amidst political uncertainty: The final reading of the IHS Markit/CIPS UK Services PMI was revised upwards from 48.6 to 49.3 in November (Oct: 50.0), but still below the no-change level in the previous month to indicate a contraction in UK services activity. The decline reflects cautious business and consumer spending stemming from the current political uncertainty leading up to next week’s elections.
USD: US private sector added fewer jobs than expected: The ADP National Employment Report showed that US private sector added a mere 67k jobs in November (Oct: 121k revised), way below analysts’ estimates of 135k. All job gains came from the services industry which saw a payroll gain of 85k, that was partly offset by the 18k reduction in the goods producing sector of which mining, construction and manufacturing each reported 6k of job losses. US ISM indicates slower growth in services activity: The ISM Non Manufacturing Index slipped to 53.9 in November (Oct: 54.7), reflecting smaller output/production last month. Nonetheless details suggest that overall services sector remains healthy, supported by solid gains in new orders, employment as well as new exports orders. Meanwhile, the final reading of the IHS Markit US Services PMI was unrevised at 51.6 in November (Oct: 50.6), above the previous month’s print to suggest a faster upturn in the services sector
From a technical and trading perspective, as anticipated in my Daily Market Outlook GBPUSD has been grinding higher and looks to be on track to test my 1.32 target. As price tests offers and stops above 1.32 there is the potential for a profit taking pause to develop. Momentum divergence and overbought conditions could provide the catalyst for a corrective phase to see price pull back to retest the 1.30 breakout area as support before the next leg of upside may develop to test offers and stops towards 1.34.
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Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
Past performance is not indicative of future results.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 75% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
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Patrick has been involved in the financial markets for well over a decade as a self-educated professional trader and money manager. Flitting between the roles of market commentator, analyst and mentor, Patrick has improved the technical skills and psychological stance of literally hundreds of traders – coaching them to become savvy market operators!