GBP/USD struggle continues ahead of services PMI

  • Sterling bulls are demoralised and are at their weakest since pre elections.
  • The daily chart shows the pair suffered a bearish break from the falling channel; courtesy of dovish BOE in November, weak PMI manufacturing and construction.
  • And now comes the services PMI.. the largest contributor to the economy.

The GBP appears oversold on the intraday charts, but we are yet to see a bullish RSI divergence. Most of the reversals are first shown by the RSI- via bullish divergence. Hence, I would refrain from adding long positions or even short positions.

If I see it near 1.4972 (channel resistance) ahead of the UK services PMI, I may think of taking a short trade with a very tight stopgbpusd

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USD/CAD impressed but not in love with Saudi proposal

 

The CAD followed by the oil prices higher on reports the Saudi is ready to cut production by 1 million barrels per day if..(Yeah if) Iran and Iraq and other non-OEPC members agree to cut their own output.

Consequently, a quickfire drop to 1.3293 was followed by a rise to 1.3320. I do not feel the Saudi news alone would be enough to driven CAD higher; more so because its conditional and Iran (which is yet to return to full capacity) is unlikely to agree to any production cuts.

USD/CAD levels to watch out for

Repeated failure to rise back above the hourly 100-MA at 1.3324 could trigger drop to 1.3246 (Nov 11 low) and 1.3239 (hourly 200-MA). On the higher side, a break above 1.3324 would bring resist. at 1.3370 into play