With Brexit concluded at midnight, forex traders are anxiously awaiting the start of trade negotiations. The Bank of England provided a boost to the British Pound, and economic data continues to surprise to the upside. After the GBPUSD completed a breakout above its horizontal support area, will bulls be able to continue the advance? Are bears waiting at the next candlestick? Subscribe to the PaxForex Daily Fundamental Analysis and grow your balance trade-by-trade.
Forex traders will finish the trading week with key US income and spending data, which is expected to show a slowdown. The Chicago PMI may also inject volatility following its release, expected to show a recession. After the GBPUSD moved above its primary descending resistance level, will bulls get the necessary data out of the US to accelerate to the upside, or will it feed a bearish attack? Today’s fundamental analysis will take a look at the upside potential as well as the downside risk in this currency pair.
Here are the key factors to keep in mind today for British Pound trades:
- UK Consumer Credit and Net Lending Securities on Dwellings: UK Net Consumer Credit for December was reported at £1.2B, and Net Lending Securities on Dwellings was reported at £4.6B. Economists predicted a figure of £0.9B and £4.1B. Forex traders can compare this to UK Net Consumer Credit for November, which was reported at £0.7B and to Net Lending Securities on Dwellings, which was reported at £4.2B.
- UK Mortgage Approvals: UK Mortgage Approvals for December were reported at 67.2K. Economists predicted a figure of 65.6K. Forex traders can compare this to UK Mortgage Approvals for November, which were reported at 65.5K.
- UK M4 Money Supply: UK M4 Money Supply for December increased by 0.1% monthly and by 3.8% annualized. Forex traders can compare this to UK M4 Money Supply for November, which increased by 0.8% monthly and by 4.5% annualized. UK M4 Money Supply excluding IOFCs 3-Month Annualized for December increased by 3.9% annualized. Forex traders can compare this to UK M4 Money Supply excluding IOFCs 3-Month Annualized for November, which increased by 4.6% annualized.
Here are the key factors to keep in mind today for US Dollar trades:
- US Employment Cost Index: The US Employment Cost Index for the fourth-quarter is predicted to increase by 0.7% quarterly. Forex traders can compare this to the US Employment Cost Index for the third quarter, which increased by 0.7% quarterly.
- US Personal Income and Personal Spending: US Personal Income for December is predicted to increase by 0.3% monthly, and Personal Spending is predicted to increase by 0.3% monthly. Forex traders can compare this to Personal Income for November, which increased by 0.5% monthly and to Personal Spending, which increased by 0.4% monthly. Real Personal Spending for December is predicted to increase by 0.1% monthly. Forex traders can compare this to Real Personal Spending for November, which increased by 0.3% monthly. The PCE Deflator for December is predicted to increase by 0.2% monthly and by 1.6% annualized. Forex traders can compare this to the PCE Deflator for November, which was increased by 0.2% monthly and by 1.5% annualized. The PCE Core Deflator for December is predicted to increase by 0.1% monthly and by 1.6% annualized. Forex traders can compare this to the PCE Core Deflator for November, which increased by 0.1% monthly and by 1.6% annualized.
- US Chicago PMI: The US Chicago PMI for January is predicted at 48.9. Forex traders can compare this to the US Chicago PMI for December, which was reported at 48.9.
- US Michigan Consumer Sentiment: Final US Michigan Consumer Sentiment for January is predicted at 99.1. Forex traders can compare this to previous US Michigan Consumer Confidence for January, which was reported at 99.1. Final Current Conditions for January are predicted at 116.0, and Final Expectations are predicted at 89.9. Forex traders can compare this to previous Current Conditions for January, which were reported at 116.0 and to Expectations, which were reported at 89.9.
Should price action for the GBPUSD remain inside the or breakout above the 1.3065 to 1.3175 zone the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Long Position
- Entry Level: Long Position @ 1.3115
- Take Profit Zone: 1.3420 – 1.3515
- Stop Loss Level: 1.2980
Should price action for the GBPUSD breakdown below 1.3065 the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Short Position
- Entry Level: Short Position @ 1.2980
- Take Profit Zone: 1.2765 – 1.2825
- Stop Loss Level: 1.3065
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