GBP/USD – Markets Eye BoE, Pound Pushes on Key 1.30 Level
GBP/USD continues to put strong pressure on the key 1.30 line, which has psychological significance. Currently, the pair is trading at 1.3012, down 0.08% on the day. In economic news, British data was mixed. The BRC Shop Price Index came in at -0.3%, as inflation levels remain weak. The Nationwide House Price Index rebounded with a gain of 0.5%, up from 0.1% in the previous release.
BoE Rate Decision “Too Close to Call”
Investors are keeping a keen eye on the Bank of England, which will release the monthly benchmark rate on Thursday. Policymakers have been hinting at a rate cut, and the economy is showing signs that a rate cut could be beneficial. Inflation levels have been falling and CPI slipped to just 1.3% in December, well below the BoE inflation target of 2.0%. Retail sales were down by 1% in the three months to December, compared to the previous three months. However, the employment market remains strong, and manufacturing and services have shown some improvement. Robert Wood, chief UK economist at Bank of America, says he expects the BoE to cut rates to 0.50 percent. Other analysts, however, are projecting that the BoE will sit this one out and maintain current rates.
Technical Analysis
I continue to monitor the 1.300 level, which is under strong pressure in support. This line was tested on Tuesday and this will likely repeat on Wednesday. Below, there is support at 1.2950. On the upside, the 50-EMA is situated just above the pair, at 1.3022. There is a resistance line close by at 1.3050, followed by resistance at the round number of 1.3100.
Pacific Currencies – Daily Summary
USD/CNY
Chinese banks are closed for the remainder of the week. The yuan slipped over 1 percent last week, so the prolonged break could be just what the doctor ordered, with markets edgy over the China coronavirus. Currently, USD/CNY is unchanged, as the pair is trading at 6.9363.
AUD/USD
AUD/USD is trading sideways in Tuesday trade. The pair is currently trading at 0.6757, down 0.08% on the day. In economic news, CPI gained 0.7% in the fourth quarter, up from 0.6% in Q3. This beat the estimate of 0.5%. However, the strong reading failed to push the Aussie higher. Trimmed CPI, which excludes the most volatile items which comprise the headline figure, remained steady at 0.4%.
NZD/USD
NZD/USD continues to put pressure on a major support level at 0.6500. Currently, the pair is trading at 0.6527, down 0.18% on the day. In economic news, New Zealand is expected to post a trade surplus in December of NZ$100 million, after five successive trade deficits.
This article was originally posted on FX Empire
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