Positive December for Pound
It’s been an up-and-down month of December for the British pound. Prime Minister Johnson’s convincing election win restored some badly-needed political stability, which has been sorely lacking since the shock Brexit vote back in June 2016. The pound soared after the election results, jumping above the 1.35 line. The gains proved to be short-lived, however, as the pound retreated and fell below the 1.30 line. Investors focused on the day after Brexit, when London and Brussels are set to commence an uneasy transition period, when negotiations will begin on a new free-trade relationship between the two sides. The pound has regained some strength and is up 1.5% in December.
GBP/USD tested resistance at 1.3100 on Friday, and this line is again being challenged on Monday. Above, there is resistance at 1.3180, which is protecting the 1.32 level. On the downside, we find support at 1.3030, followed by the round number of 1.30.
Pacific Currencies – Daily Summary
USD/CNY remains below the 7.00 line, which has psychological significance. Currently, the pair is trading at 6.9854, down 0.14% on the day. There is support at 6.98, which was tested in the Asian session. Below, 6.9700 is the next support level. We could see stronger movement from the yuan on Tuesday, when China releases Manufacturing PMI, which is expected to remain at 50.1, which points to stagnation.
AUD/USD enjoyed a good week, posting gains of 1.1 percent. The Aussie took advantage of a broadly lower U.S. dollar. Currently, AUD/USD is trading at 0.6986, up 0.06%. The pair is pressing on the symbolic level of 0.7000, which has held in resistance since mid-July.
With a bank holiday in New Zealand on Monday and Tuesday, traders can expect a slow start to the week for the New Zealand dollar. NZD/USD gained 1.4% last week, and December is set to be the pair’s best month of the year – currently, NZD/USD is up 4.5% this month.