Pre-Market Analysis And Chartbook: Pound Jumps on Brexit Rumors as Dollar Plunges

Thursday Market Snapshot

Asset Current Value Daily Change
S&P 500 2,732 0.97%
DAX 30 11,477 0.27%
WTI Crude Oil 63.87 -1.60%
GOLD 1,231 1.30%
Bitcoin 6,304 0.01%
EUR/USD 1.1400 0.79%

Forex markets are having a very active day so far with the Euro, the Pound, and the Dollar being in the center of attention. While risk assets are flat outside of the currency segment, we are seeing a risk-on shift among the major pairs, and a pullback in the recently rallying Dollar. That said, gold is up by more than 1%, even as safe-haven flows are not in favor of the precious metal, with the Japanese Yen being one of the weakest currencies.

GBP/USD, 4-Hour Chart Analysis

The Pound surged higher in early trading on, later denied, rumors about a deal on granting access to the European markets to financial firms in the UK after the Brexit. The currency pulled back after the denial but continued higher following the Bank of England’s monetary meeting.

The central bank left its benchmark rate unchanged, as expected, but it delivered a hawkish guidance with an increased growth outlook and an above-target CPI forecast. The Cable gained as much as 250 pips in the last couple of days after touching the 1.27 support, and although the long-term downtrend is clearly intact, the pair could reach the 1.3050 resistance in the coming days.

EUR/USD, 4-Hour Chart Analysis

The EUR/USD pair is having its strongest day since mid-September after testing the key 1.13 support yesterday, which marks the August lows in the Euro. The broader Dollar Index also retreated from its 16-month high thanks to the Brexit rumors, Donald Trump’s positive words regarding the trade talks with China, and the slightly worse than expected US economic releases.

The pair is facing strong resistance at 1.1440, but a stronger bounce is also in the cards, especially if China and the US get closer to a trade deal, which could spark a more durable bounce in equities and other risk assets as well. Even in the case of a stronger rally, the Euro remains in a broader declining trend and odds favor a dip below 1.13 in the coming months.

Manufacturing Cools in the US as Job Cuts Surge

Nasdaq 100 Futures, 4-Hour Chart Analysis

The ISM manufacturing PMI came in worse than expected at 57.7, but the expansion in the segment is still in no question, even as construction spending was flat in September as well. Challenger Job Cuts were also surprisingly high in October, and the negative surprises put further pressure on the Dollar while pushing Treasury yields slightly lower, even though the rally in stocks continued.

Gold Futures, 4-Hour Chart Analysis

Gold and copper sporting impressive gains thank to the dip in the Dollar and the broad risk rally, and especially the precious metal’s advance could be crucial from a technical standpoint. Gold dipped below short-term support yesterday, but today it re-entered the previous consolidation zone, possibly setting up a bear trap formation and an explosive break-out above the recent swing high.

ChartBook

Major Stock Indices

S&P 500 Futures, 4-Hour Chart Analysis

Dow 30 Futures, 4-Hour Chart Analysis

VIX (US Volatility Index), 4-Hour Chart Analysis

DAX 30 Index CFD, 4-Hour Chart Analysis

FTSE 100 Index CFD, 4-Hour Chart Analysis

EuroStoxx50 Index CFD, 4-Hour Chart Analysis

Nikkei 225 Futures, 4-Hour Chart Analysis

Shanghai Composite Index CFD, 4-Hour Chart Analysis

EEM (Emerging Markets ETF), 4-Hour Chart Analysis

Forex

USD/JPY, 4-Hour Chart Analysis

EUR/GBP, 4-Hour Chart Analysis

AUD/USD, 4-Hour Chart Analysis

Commodities

WTI Crude Oil, 4-Hour Chart Analysis

Copper Futures, 4-Hour Chart Analysis

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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.