Pound is under pressure despite soft Brexit moves

GBP/USD traders bear the burden of the UK’s second national lockdown while ignoring upbeat news favoring odds of a soft Brexit. Also weighing the quote could be the US dollar gains amid the cautious sentiment ahead of tomorrow’s American election.

In order to avoid the 20% GDP contraction, as it happened during the first lockdown in April, the BOE is expected to announce further easy money during this week’s monetary policy meeting was signaled.

 The news said, “Bank of England (BOE) policymakers are expected to inject up to £100bn into the economy when they meet this week amid mounting fears that the four-week lockdown for England will lead to a double-dip recession.”

Apart from the economic fears, worries that the death toll could be doubled, as indicated by UK PM Boris Johnson, join a longer than initially anticipated lockdown, at least till early 2021, suggested by The Times, also weigh on the pair.

EU and British Brexit negotiators will continue talks in Brussels on Monday and until around mid-week, sources on both sides said on Sunday, in a sign both sides are still pushing to avoid a damaging breakdown in trade in less than nine weeks. Intensive and secretive, the talks are a final bid to seal a new partnership agreement for when Britain’s transition out of the European Union runs its course at the end of this year.

An EU diplomatic source and a UK official said negotiations would continue face-to-face in Brussels on Monday following a full weekend of talks. An update on their progress and the chances of a deal was expected on Wednesday or Thursday, they added.

GBP/USD 4 Hour Chart:

Support: 1.2903 (S1), 1.2856 (S2), 1.2814 (S3).

Resistance: 1.2992 (R1), 1.3034 (R2), 1.3081 (R3).

Even though Brexit talks seem to be soft, the lock-down puts pressure on the pound. We expect a bearish trend for GBP/USD.

XAU/USD Weekly Forecast (2nd November 2020 – 6th November 2020)

Fundamental view:

The yellow metal had been rocking on the scope for more greenbacks, fiscal stimulus talks seemed to be making progress, but after Congress adjourned, the final nail hit the coffin of talks. The breakdown in talks weighed on the precious metal. Democrats and Republicans were hovering around a $2 trillion deal that could have helped gold prices. While that may still happen, it all depends on the elections.

FiveThirtyEight’s model has been showing Democrat Joe Biden as having an 89% chance of beating President Donald Trump, but at least for now, markets have the memory of 2016 in their minds and are cautious. Uncertainty weighed on markets, and gold was carried lower.              

The major economic events deciding the movement of the pair in the next week are ISM Manufacturing PMI at Nov 02, ADP Nonfarm Employment Change, ISM Non-Manufacturing PMI, EIA Crude Oil Stocks Change at Nov 04, Fed Interest Rate Decision at Nov 05, and Nonfarm Payrolls at Nov 06 for US.

XAU/USD Weekly outlook:

Technical View:

Last week’s high was 1.04% lower than the previous week. Maintaining high at 1911.4 and low at 1859.8 showed a movement of 516 pips.

In the upcoming week we expect XAU/USD to show a bullish trend.  The Instrument is trading below the 200 Simple Moving Average and the MACD trades to the upside. A solid breakout above 1907.06 may open a clean path towards 1935.2 and may take a way up to 1959.1. Should 1856.1 prove to be unreliable support, the XAUUSD may sink downwards 1832.2 and 1804.5 respectively. In H4 chart rounding bottom formation favors prospects of a bullish trend. Also to be noted Bullish engulfing formation exerts the expectation of uptrend for the pair.

Preference
Buy: 1875.2  target at 1925.2 and stop loss at 1851.2

 

Alternate Scenario
Sell:  1851.2 target at 1805.6 and stop loss at 1875.2  

GBP/USD Weekly Forecast (2nd November 2020 – 6th November 2020)

Fundamental view:

The British pound has fallen a bit during the course of the week but recovered nicely to reach towards the 1.30 level. United Kingdom may have to slow its economy down, if not market down. We also have the Brexit situation, which is not getting any better, so that is something to pay attention to. Furthermore, the US dollar is perhaps strengthening due to the fact that there is a lot of fear out there and of course the possibility that we may be looking at a lack of stimulus for months, which of course has an effect on the greenback itself.

US CB Consumer Confidence on 27th October and Britain M4 Money Supply on 29th October created bullish atmosphere for the pair whereas US Unemployment Claims on 29th October and  US  Personal Spending on 30th October created bearish atmosphere for the pair.

The major economic events deciding the movement of the pair in the next week are US ISM Manufacturing PMI at Nov 02, US ADP Nonfarm Employment Change, ISM Non-Manufacturing PMI at Nov 04, BoE Interest Rate Decision, BoE Governor Bailey Speech, Fed Interest Rate Decision at Nov 05, and US Nonfarm Payrolls at Nov 06.

GBP/USD Weekly outlook:

Technical View:

Last week’s high was 0.74% lower than the previous week. Maintaining high at 1.3079 and low at 1.2880 showed a movement of 199 pips.

In the upcoming week we expect GBP/USD to show a bearish trend.  The currency pair is trading below the 100 Simple Moving Average and the MACD trades to the downside. A solid breakout below 1.2860 may open a clean path towards 1.2771 and may take a way down to 1.2662. Should 1.3059 prove to be unreliable resistance, the GBPUSD may raise upwards 1.3169 and 1.3258 respectively. Chart formation of bearish gartley pattern in H4 chart favors prospects of a bearish trend. Bearish harami pattern formation escalates the expectation for a bearish trend.

Preference
Sell: 1.2962 target at 1.2772 and stop loss at 1.3064

 

Alternate Scenario
Buy:  1.3064 target at 1.3257 and stop loss at 1.2962

BTC/USD Weekly Forecast (2nd November 2020 – 6th November 2020)

Fundamental view:

Bitcoin surged in the last week. Bitcoin has begun to consolidate above $13,000. Despite this bullish trend, most Bitcoin funding rates on leading futures exchanges currently are negative.

The major economic events deciding the movement of the pair in the next week are ISM Manufacturing PMI at Nov 02, ADP Nonfarm Employment Change, ISM Non-Manufacturing PMI, EIA Crude Oil Stocks Change at Nov 04, Fed Interest Rate Decision at Nov 05, and Nonfarm Payrolls at Nov 06 for US.

BTC/USD Weekly outlook:

Technical View:

Last week’s high was 3.77% higher than the previous week. Maintaining high at 13845.6 and low at 12755.6 showed a movement of 1090 pips.

In the upcoming week we expect BTC/USD to show a bullish trend. The Instrument is trading above the 200 Simple Moving Average and the MACD trades to the upside. A solid breakout above 14073.0 may open a clean path towards 14504.3 and may take a way up to 15163.0. Should 12983.0 prove to be unreliable support, the BTC/USD may sink downwards 12324.3 and 11893.0 respectively. In H4 chart bullish gartley breakout favors prospects of a bullish trend. Three outside up candle formation constructs a bullish outlook for the pair in the upcoming week.

Preference
Buy: 13595.7 target at 14503.2 and stop loss at 12978.5

 

Alternate Scenario
Sell: 12978.5 target at 11984.3 and stop loss at 13595.7