November 5, 2021

Daily U.S. Session Watchlist: GBP/USD

 With the BOE decision lined up, I’m looking at this textbook retracement play on Cable!

Do you think the area of interest would hold?

Before moving on, ICYMI, today’s Asia-London session watchlist checked out AUD/USD’s short-term double bottom after the FOMC decision. Be sure to check out if it’s still a valid play!

And now for the headlines that rocked the markets in the last trading sessions:

Fresh Market Headlines & Economic Data:

Fed head Powell: Risks skewed towards higher inflation

Powell: Will deviate from taper plan if need arises

New Zealand ANZ commodity prices up by 2.1% after previous 1.5% gain

Australian retail sales rose 1.3% as expected

Australian trade surplus narrowed from 14.74B AUD to 12.24B AUD

BOJ Gov. Kuroda: No rush to exit stimulus even if Fed tapers

German factory orders up 1.3% vs. 1.7% forecast, -8.8% previous

Upcoming Potential Catalysts on the Forex Economic Calendar:

OPEC meetings ongoing

BOE monetary policy statement & MPC minutes at 12:00 pm GMT

U.S. initial jobless claims at 12:30 pm GMT

ECB head Lagarde’s speech at 1:00 pm GMT

BOE head Bailey’s speech at 1:00 pm GMT

If you’re not familiar with the forex market’s main trading sessions, check out our Forex Market Hours tool.

What to Watch: GBP/USD

The spotlight shifts to the pound today, as the BOE is gearing up for its monetary policy decision.

Cable already fell through support around the 1.3700 handle and looks prime for a retest of this area. Will sellers jump back in?

Stochastic is heading down and has plenty of room to go before indicating oversold conditions, so price could follow suit while bearish pressure is in play.

The 100 SMA is also below the 200 SMA to confirm that resistance levels are more likely to hold than to break.

Applying the handy-dandy Fib tool shows that the 61.8% level is in line with the former support area while the 50% Fib is close to the 200 SMA dynamic resistance.

The 38.2% Fib already seems to be keeping gains in check for now, though!

I’m still counting on additional volatility during the BOE event since policymakers might have some surprises up their sleeve.

Keep in mind that the U.K. central bank is under pressure to tighten monetary policy since inflation might spiral out of control. Refraining to do so might mean more downside for sterling since it could worsen the threat of stagflation.

More MPC members voting to trim asset purchases might mean some upside for GBP/USD, so I’m gonna keep close tabs on the higher Fibs in case they hold as resistance.