Helena Izotova
Forex news, GBP/USD. Having started the previous week at the point of 1.5945, 50% Fibo from 1.6617-1.5272 drop, in three days the pair has passed a very strong option barrier of 1.5999. On Wednesday though, it rapidly dropped back to the level of the beginning of the week, being stopped by option support of 1.5911. This happened despite numerous orders of durable goods and new home sales. On this day the pound has dropped by 150 points. On Thursday, due to good news from the summit of European Union, the pound kept growing, having passed another level of resistance of 1.6074. As a result, it has shown a daily range of 186 points. Maximum level for the month, which equals to 1.6151, was reached on Friday. The pair has faced the end of the week at the point of 61.8 % Fibo from 1.6617-1.5272 drop. The weekly range has amounted to 261 point.
Current week is going to be tense. As usual, most significant figures are to be published at the beginning of the month:
October 31, 01:30 p.m. – Net Lending to Individuals. Halifax HPI is expected to be issued during the period of November 1-4.
November 1, 11:00 a.m. – Nationwide HPI; 01.30 p.m. – Manufacturing PMI; 01:30 p.m. – Prelim GDP, expected value – 0.4%, previous value – 0.1%.
06:00 p.m. (US time) – ISM Manufacturing PMI.
November 2, 01:30 p.m. – Construction PMI, expected value – 50.2, previous value – 50.1.
At 04:15 p.m. (US time) ADP Non-Farm Employment Change is to be issued, 08:30 p.m.– FOMC claim, 10:15 p.m. – FOMC press conference. These two events usually bring in volatility burst.
November 3, 01:30 p.m. – Services PMI, expected value – 51.9, previous value – 52.9.
04:30 p.m. (US time) – Unemployment Claims, 06:00 p.m. – ISM Non-Manufacturing PMI.
November 4, 04:30 p.m. – Non-Farm Employment Change and Unemployment Rate are going to be issued in the USA.
November 3 and 4 – the meeting of G20 .
Movement will be stipulated by Q3 Prelim GDP in Great Britain, Non-Farm Employment Change in the USA, FOMC claim, and the meeting of G20.
GDP is expected to decline. George Osborne predicts that next year Great Britain will experience minor growth. It is worth reminding that, according to the British Finance Minister, GDP was supposed to rise by 1.7% in 2011, and economic growth is supposed to amount to 2.5% in 2012.
Centre for Economic and Business Research (CEBR) believes that Eurozone remains in critical condition due to low perspectives of economic growth. The centre warns about the possibility of bank crisis similar to the one in 2008. CEBR predicts that GDP will rise only by 0.7% in 2012. This is two times less than predicted by Ernst & Young's Item Club, which predicts the rise by 1.5%.
“Eurozone financial crisis is likely to become similar to Lehmans,” concluded Douglas McWilliams, Chief Executive Director of CEBR, having accused the previous government of ineffective financial management.
The report has also claimed, “This means that the Bank of England is responsible for maintaining growth and preventing double recession in the nearest future. The interest rate is most likely to remain at the same level till mid 2013, and quantitative easing is almost certain to increase in volume (to over £75 bln., as announced this month).”
On November 3 and 4 investors will pay major attention to the meetingof G20 in Cannes, which will discuss a number of burning issues in the sphere of economy, including the possible growth and the debt crisis of Eurozone. The participants of the meeting will include Finance Ministers and Heads of Central Banks from 20 industrially developed countries, including G7 – Canada, Italy, France, Germany, Japan, Great Britain, and the USA. It will be a closed meeting, but officials will be able to give interview to press during the day. As soon as the meeting is over the official claim concerning political changes and its specific goals will be announced. G20 is a powerful policy-maker worldwide, which is highly authoritative, and whose initiatives and police can influence currency markets.
Resistance on the way up will be provided by points 1.6074 and 1.6232. Down trend will start only when the pair is firmly set below the strong option barrier of 1.5999. Then support will be provided by option levels 1.5911 and 1.5721.
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Issued by MF Academy Department of Options
Helena Izotova
