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U.S. Overnight Forex Preview: GBP/USD In Focus

Mondays have a way of being dull as market participants game plan for the remainder of the week. Today has been anything but, featuring active forex, cryptocurrency, and equities markets. Considerable losses in the indices and cryptocurrencies have made headlines as the trading week is officially underway.

The coming U.S. overnight session features a moderately full slate of economic events poised to shake up the forex:

Country                           Event

Australia                         RBA Interest Rate Decision

Germany                        Factory Orders (Dec.) (MoM, YoY)

Canada                           International Merchandise Trade (Sept.)

U.S.                                 Trade Balance (Dec.)

The RBA Interest Rate Decision is the key event of this group. The consensus opinion is that rates will be held steady at 1.5%. In the wake of a recently soft gold market, I expect the RBA to stay the course with no rate hike and dovish commentary toward the AUD.

Trade statistics for Canada and the U.S. will factor greatly into the USD/CAD market tomorrow. Currently, the USD/CAD is trending higher. Participation is robust and will become heightened as the market digests these reports. Be sure to check in tomorrow for a breakdown of where the USD/CAD may be headed by week’s end.

GBP/USD Technicals

The Bank of England (BoE) is scheduled to announce its interest rate decision Thursday. Until then, a trade setup in the GBP/USD is very likely to develop. Let’s prepare by taking a look at the daily time frame.

GBP/USD, Daily Chart

There are several key areas facing this market ahead of the BoE:

  • Resistance(1): Swing High, 1.4344
  • Support(1): 38% Retracement, 1.4006
  • Support(2): 20 Day EMA, 1.3958

Overview: In lockstep with the rest of the majors, the USD is showing strength against the GBP. The 1.4000 handle is attracting robust participation, as is the 38% retracement level of 1.4006. This will be a key area for the remainder of the week.

A long trade from the Bollinger MP or SMA may be on the table in the coming sessions. If an advantageous scenario comes to pass it will be available on the live update stream. Until then, be sure to check out the signals page for ideas on how to profit from the early-week action.

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Shain Vernier
US Analyst
Shain Vernier has spent over 7 years in the market as a professional futures, options and forex trader. He holds a B.Sc. in Business Finance from the University of Montana. Shain's career includes stretches with several proprietary trading firms in addition to actively managing his own accounts. Before joining FX Leaders, he worked as a market analyst and financial writer.
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