The GBP/USD currency pair started very bullish into the month of November, with Cable gaining as much as 2 cents or 1.6% on 1 November, making it the 5th best day since the Brexit referendum in 2016. GBP/USD kept its momentum, and pushed significantly back above 1.3100. The main driver could surely be found around the optimism on a EU-UK deal for UK financial services post-Brexit, and a hawkish tone delivered from the Bank of England (BoE) last Thursday.
Source: Economic Events 09 November 2018 – Admiral Markets’ Forex Calendar
In their statement, the BoE hinted that a smooth Brexit could quicken the bank’s rate-hiking cycle, and despite good economic data, the uncertainty surrounding Brexit could bring further volatility. With this in mind, and when looking at the packed economic docket for GBP today, it becomes possible to draw an interesting scenario from this information, whereby traders can attemtp to profit from potential short term moves.
When taking a step back, one can come to the conclusion that on a daily time frame, the outlook for GBP/USD can be considered neutral, but with a clear bearish touch below 1.3250/3300. Based on that: if GDP (QoQ) does not come out at the highest level since January 2017, and at the optimistic forecast of 0.6%, GBP/USD could see a bigger drop into the weekly close from its current, elevated levels, going for a re-test of the region around 1.3000/3030.
But still: even with a reading at 0.5%, and with the given and realistic chance to get a rather sooner than later Brexit deal which is in favour of the UK, but also the EU, such a reading can still be considered positive for GBP/USD. And as long as Cable does not fall below 1.2950 on an hourly time frame, another stint towards and above 1.3200 within the next days seems possible.
Source: Admiral Markets MT5 with MT5SE Add-on, Accessed: 08 November 2018, 11:00 PM CET
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