Daily Analysis: Pound Slammed Lower as BOE Keeps Rate Unchanged

Thursday Market Recap

Asset Current Value Daily Change
S&P 500 2468 -0.17%
DAX 12154 -0.22%
WTI Crude Oil 49.45 -0.30%
GOLD 1270.00 -0.15%
Bitcoin 2780 3.03%
EUR/USD 1.1875 +0.17%

The Bank of England stole the show today with the much-awaited rate decision that provided a mixed bag for the market.  With some rumors circulating about a rate hike before the meeting traders were shocked by a relatively clear vote (6-2) on keeping the interest rate at the historic low. The Pound fell sharply after the decision, and the Dollar got hammered again as well following the worse than expected ISM Non-Manufacturing PMI that underlined the ongoing weakness in the US consumer segment. Stock markets traded in a choppy fashion amid the forex volatility with a slight bearish bias globally.

GBP/USD, 4-Hour Chart Analysis

The “perfect bullish storm” that hit the Euro dragged the major indices lower on the Old Continent, although the Eurozone PMIs were also on the negative side. But as the momentum is still with the common currency, the 1.20 level in the EUR/USD might be hit before a meaningful correction in the “Euro-Madness” as IGN put it. Gold and oil also are both gaining holding up in the mixed environment, despite yet another “fat finger” decline in precious metals overnight. Gold now looks poised to rally towards the key $1300 level, while oil will likely have a hard time passing the $50 level significantly.

Gold, 4-Hour Chart Analysis

Cryptocurrencies

The crypto segment is looking better and better since the Bitcoin fork, as the feared event failed to break the market’s stability. The most traded majors all settling down while holding above crucial support levels after a period of uncertainty and choppy trading. Ethereum is still the biggest drag on the market as a whole, as the second biggest coin is still within its long-term correction pattern. That said, we still expect a broad bullish move in the coming weeks, with possible new highs for Bitcoin as the SegWit activation process continues.

BTC, 4-Hour Chart Analysis

Technical Picture

The NASDAQ has been trading in a narrow range before tomorrow’s crucial Employment Report, as the busiest part of the US earnings season is drawing to an end. The better than expected report of Apple (AAPL) was not enough to maintain the bullish momentum of the tech index, as the advance got narrower and narrower, with only the mega-cap DOW hitting new highs in the past few days. We expect more weakness in the coming period and short-term traders should be looking for opportunities to enter short positions. Primary support is now found at 5850 in the NASDAQ 100, with further targets at 5800 and at 5725.

NASDAQ 100 Futures, Daily Chart Analysis

Key Economic Releases on Thursday

Time, CET Country Release Actual Expected Previous
3:30 AUSTRALIA Trade Balance 0.86 bill 1.77 bill 2.47 bill
10:30 UK Services PMI 53.8 53.7 53.4
13:00 UK BOE Rate Decision 0.25% 0.25% 0.25%
13:00 UK BOE Statement
14:30 US Initial Jobles Claims 240,000 242,000 244,000
16:00 US ISM Non-Manufacturing PMI 53.9 56.9 57.4
16:00 US Factory Orders 3.0% 2.7% -0.8%

Key Economic Releases on Friday

Time, CET Country Release Expected Previous
3:30 AUSTRALIA RBA Monetary Policy Statement
3:30 AUSTRALIA Retail Sales 0.2% 0.6%
14:30 CANADA Employment Change 14,600 45,300
14:30 CANADA Unemployment Rate 6.5% 6.5%
14:30 CANADA Trade Balance -1.4 bill -1.1 bill
14:30 US Non-Farm Payrolls 183,000 222,000
14:30 US Unemployment Rate 4.3% 4.4%
14:30 US Hourly Earnings 0.3% 0.2%
14:30 US Trade Balance -45.6 bill -46.5 bill
16:00 CANADA Ivey PMI 59.2 61.6

Featured image from Shutterstock

Author:
Trader and financial analyst, with 10 years of experience in the field. An expert in technical analysis and risk management, but also an avid practitioner of value investment and passive strategies, with a passion towards anything that is connected to the market.