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Fundamental Headlines
• Euro Bounces Ahead of Irish Budget Vote – Wall Street Journal
• Australia Keeps Rates Steady – Wall Street Journal
• U.S. Treasury Sells Remaining Citi Shares - Financial Times
•China Outstrips Fed With Liquidity Risking 2011 Inflation Spike- Bloomberg
•EU Rules Out Immediate Aid Boost, Banks on ECB to Fight Crisis - Bloomberg
GBPUSD: Industrial production in the U.K. unexpectedly contracted 0.2 percent in October after climbing 0.4 percent the month prior amid economists’ expectations of 0.3 percent. At the same time, the annualized rate rose 3.3 percent. Looking ahead, industrial production is expected to weaken into 2011 as austerity measures will weigh on growth. Meanwhile, manufacturing output doubled economists’ forecasts as figures rose 0.6 percent in October. GBP traders will now shift their focus to the Bank of England interest rate decision, which will be released on Thursday. I do not expect the central bank to refrain from raising its key overnight lending rate and asset purchase target heading into 2011 as policy makers monitor the effects of the spending rates. Taking a look at price action, the GBPUSD has pared yesterday’s decline, but upside risks are capped by the 20-day SMA. A break above this level exposes the 50-day moving average for resistance. Moreover, the pair faces losses in the medium term following the break and close the rising trend line that served as support for 5 months. As my bias remains to the downside, I will look to enter a short position around the 1.58 area so long as the MACD does not reverse its course.
Written by Michael Wright, Currency Analyst
To Receive Future Articles by Email, please contact me at mwright@fxcm.com
Michael Wright is the author of FX Headlines, Fundamentals vs. Technical’s, Weekly Spotlight, and Forex Trading Weekly Forecast
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