U.S. Overnight Preview: GBP/USD On The Front Burner

The coming U.S. overnight session is a big one, featuring several key economic events originating in Europe. EUR/USD and GBP/USD valuations are likely to be impacted upon their release. Be sure to tune into my colleagues Rowan, Arslan, and Skerdian for real-time insights into the news items as they draw near.

Here is the full slate of events for the U.S. overnight:

Country                     Event

Japan                        All Industry Activity Index (Dec.)

Eurozone                  Non-monetary Policy ECB Meeting, Markit PMI (Feb.)

Switzerland               Industrial Production (Q4)

U.K.                           Average Earnings (Dec.), ILO Unemployment (Dec.)                                           

U.K.                           Inflation Report Hearings, BoE Carney Speech

No doubt, it is a big night for the British pound sterling. With so many prominent data releases and official speeches, we will have a good idea of where the GBP stands by tomorrow’s U.S. cash open.

In addition to the items coming out of the U.K., tomorrow afternoon marks the release of the FOMC Minutes from the U.S. Federal Reserve (FED). The rhetoric will be examined thoroughly as traders look for clues on the future of FED policy.

GBP/USD Technicals

We are poised for a directional move in the GBP/USD. Today’s range is extremely tight, with action confined between support and resistance. Given the economic calendar for the next 24 hours, this market is certain to break out.

Today’s intrasession action is very similar to that of yesterday. Price has rejected downside support and entered heavy rotation. Both the Daily SMA and Bollinger MP will update upon Wednesday’s electronic open, so listing them as support and resistance ahead of the U.K. news items is not productive. However, there are a few other areas worth paying attention to:

• Resistance (1): Round number, 1.4100
• Support (1): Macro 62% Retracement, 1.3796
• Support (2): Macro 78% Retracement, 1.3653

Overview: It appears that traders and investors are content waiting for the coming slew of economic events before committing. Technically, this market is neutral. Fundamentally, it is anyone’s guess. A weak set of metrics from the U.K. and dovish tone from the BoE will bring bears to the table. In addition, the expected hawkish tone from tomorrow’s FOMC Minutes may fuel strength from the USD. While backers of the pound may eventually win the day, I am not fond of being long this market.

All in all, it is a great time to take in the fundamentals and gameplan for the remainder of the trading week.