FX Traders Turn Back To Data
Joe Perry | Dec 16, 2019 04:54PM ET
With the UK elections now behind us, there is less uncertainty surrounding an orderly Brexit come the end of January (or sooner). Although Boris Johnson still has a great deal of work ahead of him, FX market participants may begin to pay attention to the data once again moving forward. This week brings a plethora of data from the UK to use as a re-starting point, which will begin to bring everyone up to date from those summer days before the Brexit deal was a “done deal.” On Monday we took our first look at December’s PMI data and both the manufacturing and services PMIs were worse than expected. Here is the lineup for the rest of the week:
After the Bank of England meeting on Thursday, market participants will have a better take on the UK economy. Take this data with a grain of salt as it's from November, which was the time leading up to the elections. Much of the country was “on hold” waiting for the election outcome. As we are currently mid-way through December, any real economic uptick or downtick will likely not be until January.
GBP/USD bulls will be looking for dips to 1.3200 to buy. After the breakout from the pennant and the extreme move higher on Friday, price is currently in overbought conditions and seen on the RSI, which is close to 80. With the move higher, price pierced the 1.3500 level and 61.8% retracement from the April 2018 highs to the September 3, 2019 lows and then pulled back. GBP/USD put in an inside day on Monday (as did most USD pairs), as the market waits for more information.
Source: Tradingview, FOREX.com
The target on the pennant is near 1.3775. Data this week, the BOE or Brexit comments could continue to push price higher. Just keep in mind that economic activity may pick up going forward with the uncertainty of the election out of the way.
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