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GBP/USD Forecast: Carney could restrict gains around hourly 200-MA

GBPUSD

The GBP/USD pair formed a bullish pinbar formation on Monday and thus extended gains to near 1.51 levels in Asia today. The sell-off in the EUR/GBP ahead of the Thursday’s ECB meeting helped the GBP/USD recover from the Monday’s low of 1.4994. The focus today is on the Bank of England’s Carney’s speech and the UK manufacturing PMI report.

Carney could overshadow UK PMI report

The UK manufacturing PMI for November is seen coming-in at 54.00 from Oct’s 55.5. The inflow of new export orders would be watched out by markets; since the UK’s worsening current account to GDP ratio is a cause of concern and could take a centre stage in 2016.

BOE’s Carney comes a few minutes ahead of the PMI report and thus could push the GBP/USD pair back to around 1.5087 (61.8% of Apr-Jun rally) with his cautious comments on the UK economy. Consequently, the cable may have a hard time rising above 1.5124 (hourly 200-MA) despite a strong PMI report.

Sterling could take out 1.5124 (38.2% of 1.5335-1.4994 + hourly 200-MA) and test 1.5185 (23.6% of July 2014-Apr 2015 plunge) if Carney surprises markets with a slightly hawkish tone and the PMI number prints higher than expected.

On the other hand, a dovish carney coupled with a weaker-than-expected UK PMI report could lead to a failure to sustain above 1.5087 and trigger a sell-off to 1.50 handle.

Technicals – Bullish above 1.5087

Sterling’s bullish pinbar from the 7-month low, followed by a rise to 1.51 levels in Asia today indicates the pair is likely to take out the hourly 200-MA at 1.5124 and test 1.5163 (Sep 4 low) – 1.5185 (23.6% of Jul 14-Apr 15 plunge). On the other hand, a repeated failure to take out 1.5107 followed by a break below 1.5087 (61.8% of Apr-Jun rally) could trigger a fresh drop to 1.5028 (Nov 27 low).

EUR/USD Analysis: Eyes US ISM number

EURUSD

The EUR/USD pair dropped for the fourth consecutive session on Monday. The ECB action appears to have been priced-in by the markets, however, the uncertainty still persists about the kind of action that the ECB will announce this Thursday. This uncertainty is keeping the EUR under pressure, although the magnitude of the daily fall has dropped off late, which again points to the fact that the ECB action may have been priced-in by the markets.

Eyes US data, EU data could be non-event

The Eurozone and German PMI figures could turn out to be non-events for the markets so long as the actual figures are not surprisingly weak/strong. Moreover, the figures are unlikely to influence the ECB and thus markets are likely to turn a blind eye towards the same ahead of Thursday’s ECB event.

The US ISM manufacturing figure could attract attention; especially the employment sub index. The pair could come under pressure solely on the back of a strong employment sub index, since it would increase the odds of a better-than-expected non-farm payrolls report due on Friday.

Technicals – Could test hourly 200-MA

A triangle formation could be seen on the hourly chart and a bullish break from the same could see the pair rise to its hourly 200-MA seen at 1.0630 levels. On the other hand, a bullish break from the triangle formation, but a repeated failure to take out 1.06 could lead to a much sharper sell-off to 1.05 levels.

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