Brexit deal or no deal, it's difficult to trade GBP nowadays

Morning Brief, Nov 20 – Top Forex Trade Setups, UK’s Inflation Report Hearings in Highlight

Posted Tuesday, November 20, 2018 by
Arslan Butt • 2 min read
  • The Greenback trades slightly bearish against other major currencies after Federal Reserve officials showed caution over the global growth outlook.
  • Inflation Report Hearings is due during the London session. What to expect?
  • Find out about our update on GBP/USD and our long-term trade on USD/CAD.

GBP/USD – Investors Eye Inflation Report Hearings

On Monday, the British Pound turned negative, with traders steering to remarks from Prime Minister Theresa May that an extension of the Brexit transition phase was unlikely. Ultimately, the funds moved to other currencies like the Euro.

Inflation Report Hearings At 10:00, the Governor and the MPC (Monetary Policy Committee) are gonna testify on the inflation report before the Parliament. The hearings are a few hours in length and can create market volatility for the duration. Especially noted are the direct comments made about the currency markets.

The UK’s inflation rate is still in range, but this month, it fell from 2.5% to 2.4%. All we need is to see what they are expecting in the future. Today’s hearing may have a muted impact on the market but that’s the only major event today so we shouldn’t miss it.

GBP/USD – Technical Outlook
The technical side remains unchanged as the forex market trades sideways in the absence of major catalysts. On the 4-hour chart, the GBP/USD is trading bearish after testing a strong resistance level at 1.2900. For the moment, the pair is trading near $1.2825 and it may face an immediate resistance near $1.2950 and $1.3045 along with a support near $1.2750.

Daily Technical Levels
Support     Resistance
1.2775        1.2877
1.2725        1.2928
1.2623        1.303
Key Trading Level: 1.2827

GBP/USD – Trade Plan

Today, the idea is to stay bullish above $1.2880 with a stop below $1.2860 and a take profit of $1.2950.

 

USD/CAD – Quick Update on Long-term Trading Signal

Our forex signal on USD/CAD is trading in line with our expectations. The trading signal is in +25 pips profit, but we may face a slight pullback until $1.3145. The USD/CAD is still holding above a bullish trendline which is extending it strong support near $1.3140.

The pair broke out of the previous range $1.3140 – $1.3165 to enter another one at $1.3200. The odds of a bullish breakout will remain higher.

Daily Technical Levels
Support    Resistance
1.3122       1.3182
1.3095      1.3215
1.3035      1.3275
Key Trading Level: 1.3155

USD/CAD – Trade Plan

I’m sticking with the same trading signal of stay bullish above $1.3146 with a stop below $1.3125 and take profit at $1.3200.

 

Economic Events to Watch

USD – Building Permits: At 13:30 (GMT), the Census Bureau will release the annualized number of new residential building permits issued during the previous month. It’s expected to be 1.26M vs. 1.24M previously.

USD – Housing Starts is also due at 13:130 (GMT) and it’s expected to rise from 1.24M to 1.26M. It shows the annualized number of new residential buildings that began construction during the previous month.

Both data are releasing at the same time, so in order to have a significant reaction, both figures need to be released in the same direction. This way, we can capture a quick trade in dollar-denominated currency pairs.

Good luck and stay tuned for more updates.

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About the author

Arslan Butt is our Index & Commodity Analyst
Arslan Butt is our Lead Commodities and Indices Analyst. Arslan is a professional market analyst and day trader. He holds an MBA in Behavioral Finance and is working towards his Ph.D. Before joining FX Leaders Arslan served as a senior analyst in a major brokerage firm. Arslan is also an experienced instructor and public speaker.
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