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GBP/USD – Pound Ends 2019 on High Note

The U.S. dollar sagged on the last day of 2019, as the pound jumped over 1 percent. The pound has steadied on Thursday, as volume remains light in this holiday-shortened week. The Aussie, NZ dollar and Chinese yuan also took advantage of a weaker U.S. dollar, ending the year with gains.
Kenny Fisher
GBP/USD Price Forecast - British Pound Shows Indecision

GBP/USD posted sharp gains of over 1 percent on Tuesday (Dec. 31st), taking advantage of broad U.S dollar weakness. The pair has started the New Year quietly. In European trade, the pair is trading at 1.3224, down 0.22% on the day.

Investors Eye PMI Reports

After a pause for New Year’s, investor focus is on the British PMI releases for December, which are important gauges of key sectors in the economy. Later on Thursday, we’ll get a look at Final Manufacturing PMI, which is expected in at 47.6 pts. This is slightly higher than the initial reading of 47.4, but nonetheless points to contraction. This will be followed by Construction PMI on Friday and Services PMI on Monday. Both releases are projected to indicate contraction, with estimates below the 50-level.

Roller Coaster December for Cable

The pound showed strong volatility in December, a microcosm for the pound’s fortunes in 2019. GBP/USD fell as low as 1.1958 in early September, as Brexit caused plenty of political drama in the British parliament. Only three months later, the pound soared above the 1.35 level, as the markets were elated with Boris Johnson’s surprisingly easy election win. This has paved the way for a Brexit departure at the end of January. However, traders should be prepared for more swings from the pound early in 2020, as the transition period after Brexit promises to be uneasy and difficult. Already London and Brussels are arguing whether 11 months is enough time to conclude a new trade deal- the EU wants more time, but Prime Minister Johnson wants out of the EU as soon as possible.

Technical Analysis

GBP/USD is currently range-bound. On the upside, there is resistance at 1.3280. The pair is putting downward pressure on 1.3200. Below, we find support at 1.3150.

GBP/USD 1-Day Chart

 

Pacific Currencies – Daily Summary

USD/CNY

After losing ground on the final day of 2019, USD/CNY has steadied. The pair dropped to a low of 6.9551 on December 31st, its lowest level since early August. Currently, the pair is trading at 6.9631, up 0.06% on the day.

Chinese Caixin Manufacturing PMI dipped to 51.5 in December, down from 51.7 a month earlier. Still this was stronger than the official Manufacturing PMI released earlier in the week, which remained steady at 50.2 pts.

AUD/USD

AUD/USD ushered in 2020 on a positive note, as the pair closed on December 31st above the symbolic 70 level. Currently, AUD/USD is trading at 0.6998, down 0.24% on the day. In economic news, Commodity Prices recorded a decline for a third successive month, coming in at -2.1% in December.

NZD/USD

NZD/USD had an excellent month of December, climbing 4.9 percent. This was its best monthly performance since November 2018. Currently, NZD/USD is trading at 0.6720, down 0.20% on the day. On December 31st, the pair touched a high of 0.6755, its highest level since mid-August.

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