Friday, November 8, 2019

GBP/USD

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Fundamental Highlights

The main catalyst behind the Cable selloff was the dovish twist in the BOE’s monetary policy announcement. The BOE MPC maintained the interest rates, however, two MPC members voted for a rate cut. Moreover, Governor Carney worsened the sentiment even further when he mentioned the risks of a global economic downturn and warned that a no-deal Brexit would likely result in job losses and business closures. Meanwhile, the broad-based rally on the US Dollar added more pressure on the Pound, after the US-China trade deal hopes backed risk-on sentiment, which sparked a massive rally in the Treasury yields. Looking forward, this bearish sentiment will likely continue today on the Pound unless a positive Brexit headline disrupts the market.

Technical Analysis

The Cable is possibly forming a Double-Top reversal pattern, however it will only be confirmed if price breaks below the 1.2790 neckline support, which will expose the 1.27 level for a possible retest. The bulls need to find momentum and push price higher, ideally above the 50-day moving average to invalidate this bearish pattern.

Support: 1.2790 / 1.27
Resistance: 1.2850 / 1.2930

Chart (H4)
GBPUSD