Cable showed upward movement despite Brexit negotiations

GBP/USD shows upward movement this Monday, helped by the upbeat market mood-led additional weakness in the US dollar across its main competitors. The haven demand for the US dollar got almost killed, as euphoria on the corona virus vaccine progress, solid Chinese factory output and Japanese economic rebound lifted Asian equities to record highs. The risk-on mood partly offset concerns over virus cases and restrictions in the US, rendering dollar-negative.

Meanwhile, the higher-yielding pound took advantage of the risk-rally, shrugging off the latest negative developments surrounding the Brexit issue, as the negotiations over a potential trade deal between the UK and EU are likely to extend beyond this week.

With this week being a crucial one for Brexit talks, the UK has now hinted that the negotiations could actually stretch out beyond this week. Both sides have struggled to overcome the key barriers to reaching a trade deal, with fisheries being a major hurdle.

Environment Secretary George Eustice said Sunday it would be possible to “squeeze out extra time” if the two sides were close to an agreement while Britain’s chief Brexit negotiator David Frost said on Sunday that he was heading back to Brussels for more discussions. ”The UK will not be changing its position in the coming talks,” he said.

However, he also explained that ”some progress in a positive direction in recent days,” has been made, but warned that they ”may not succeed.” “This needs to be a week when things move when we break through some of these difficult issues and get a resolution, and at least have some sort of headlines of an agreement,” he said.

In other recent headlines, Ireland’s Foreign Minister Simon Coveney told Sky News, “If UK imposes Internal Market Bill, we won’t get a deal.”

GBP/USD 4 Hour Chart:

Support: 1.3135 (S1), 1.3080 (S2), 1.3052 (S3).

Resistance: 1.3217 (R1), 1.3246 (R2), 1.3300 (R3).

Amidst all the prevailing catalysts, we expect a bullish trend for GBP/USD.

AUD/USD Weekly Forecast (16th November 2020 – 20th November 2020)

Fundamental view:

Australian dollar finished higher last week, underpinned by increased demand for higher-risks assets on increased hopes for a faster than expected end to the coronavirus pandemic after Pfizer announced the development of a vaccine that tested at 90% effective. That news spiked the Aussie higher early in the week then investors held on the rest of the week as market participants questioned the timing of the release of any vaccines and the distribution methods. Furthermore, COVID-19 cases continued to rise at a rapid rate in the United States, threatening to derail the global economic recovery.

US IBD/TIPP Economic Optimism on 10th November and US CPI monthly report on 12th November favored bullish trend for the pair whereas US Federal Budget Balance on 12th November favored bearish trend for the pair.

The major economic events deciding the movement of the pair in the next week are RBA Governor Lowe Speech, NY Fed Empire State Manufacturing Index at Nov 16, US Retail Sales monthly report at Nov 17, US Building Permits at Nov 18, Australia Employment Change, US Initial Jobless Claims at Nov 19, and G20 Meetings at Nov 20.

AUD/USD Weekly outlook:

Technical View:

Last week’s high was 0.69% higher than the previous week. Maintaining high at 0.7340 and low at 0.7221 showed a movement of 119 pips.

In the upcoming week we expect AUD/USD to show a bearish trend.  The currency pair is trading above the 200 Simple Moving Average and the MACD trades to the downside. A solid breakout below 0.7213 may open a clean path towards 0.7158 and may take a way down to 0.7094. Should 0.7331 prove to be unreliable resistance, the AUDUSD may raise upwards 0.7395 and 0.7450 respectively. In H4 chart inverted cup and handle pattern formation favors prospects of a bullish trend. Also to be noted shooting star formation exerts the expectation of downtrend for the pair.

Preference
Sell: 0.7265 target at 0.7159 and stop loss at 0.7336

 

Alternate Scenario
Buy:  0.7336 target at 0.7449 and stop loss at 0.7265

GBP/USD Weekly Forecast (16th November 2020 – 20th November 2020)

Fundamental view:

The British pound showed a mixed trend last week.  British pound is going to be very volatile look at the Brexit situation not getting any more clarity. Furthermore, if we get some type of major “risk off move”, it could drive money into the US dollar. Finally, closing down the United Kingdom from an economic standpoint, so that does not help the situation either.

The major economic events deciding the movement of the pair in the next week are NY Fed Empire State Manufacturing Index at Nov 16, BoE Governor Bailey Speech, US Retail Sales monthly report at Nov 17, US Building Permits at Nov 18, US Initial Jobless Claims at Nov 19, UK Retail Sales monthly report and G20 Meetings at Nov 20. 

 GBP/USD Weekly outlook:

Technical View:

Last week’s high was 1.03% higher than the previous week. Maintaining high at 1.3313 and low at 1.3106 showed a movement of 207 pips.

In the upcoming week we expect GBP/USD to show a bearish trend.  The currency pair is trading above the 200 Simple Moving Average and the MACD trades to the downside. A solid breakout below 1.3092 may open a clean path towards 1.2995 and may take a way down to 1.2885. Should 1.329 prove to be unreliable resistance, the GBPUSD may raise upwards 1.3410 and 1.3506 respectively. Chart formation of rising wedge pattern in H4 chart favors prospects of a bearish trend. Spinning top pattern formation escalates the expectation for a bearish trend.

Preference
Sell: 1.3189 target at 1.2996 and stop loss at 1.3305

 

Alternate Scenario
Buy: 1.3305 target at 1.3505 and stop loss at 1.3189

EUR/USD Weekly Forecast (16th November 2020 – 20th November 2020)

Fundamental view:

Euro fell early last week even as hopes of a corona virus vaccine raised the tantalizing prospect of a global economic recovery and prompted a move by investors out of safe havens like the US Dollar into more risky assets such as stocks. By Thursday, this optimism had already started to fade and that raises the prospect that the decline in EUR/USD could be extended this coming week, particularly as the ECB still seems certain to loosen monetary policy next month.

Europe German Trade Balance & Sentix Investor Confidence on 9th November and Unemployment Claims on 12th November favored bullish trend and  German ZEW Economic Sentiment on 10th November favored bearish trend for the pair.

The major economic events deciding the movement of the pair in the next week are NY Fed Empire State Manufacturing Index at Nov 16, US Retail Sales monthly report at Nov 17, ECB Non-monetary Policy Meeting, US Building Permits at Nov 18, EU Leaders Summit, US Initial Jobless Claims at Nov 19, and G20 Meetings at Nov 20.  

EUR/USD Weekly outlook:

Technical View:

Last week’s high was 0.24% higher than the previous week. Maintaining high at 1.1920 and low at 1.1745 showed a movement of 175 pips.

In the upcoming week we expect EUR/USD to show a bearish trend. The currency pair is trading above the 200 Simple Moving Average and the MACD trades to the downside. A solid breakout below 1.1745 may open a clean path towards 1.1658 and may take a way down to 1.1570. Should 1.1919 prove to be unreliable resistance, the EURUSD may raise upwards 1.2007 and 1.2094 respectively. Chart formation of a pennant pattern in H4 chart sets prospects for a bearish trend. Spinning top formation in H4 chart escalates the expectation for a bearish trend.

Preference
Sell: 1.1831 target at 1.1659 and stop loss at 1.1925

 

Alternate Scenario
Buy:  1.1925 target at 1.2093 and stop loss at 1.1831