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GBP/USD – Pound Showing Strong Swings Early in New Year

The pound is showing strong movement early in the year, and with investors unnerved by the U.S. killing of an Iranian general, the volatility could well continue this week.
Kenny Fisher
GBP/USD Price Forecast - British Pound Pulls Back

GBP/USD has posted slight losses on Tuesday. Currently, the pair is trading at 1.3147, down 0.19% on the day.

Which Direction for the Pound?

The pound ended 2019 on a winning note, as GBP/USD chalked up gains of over 1.0% on the final day of the year. The pound reversed direction on Friday, the first trading day of 2020, but recovered these losses on Monday. So where is the pound headed? The U.S. airstrike which killed an Iranian general has roiled the markets, so we could see further volatility in the currency markets this week. Traders should exercise caution while the markets remain unsettled.

British Services Sector Stabilizes

Business activity in the U.K. was stronger than expected in December. Services PMI improved to 50.0, up from 49.3 a month earlier. This figure beat the estimate of 49.1 pts. The 50-level separates contraction from expansion, so a reading of 50.0 indicates no change in services activity in December. Other key sectors of the economy remain in decline. Last week, Final Manufacturing PMI, slowed to 47.5, down from 48.9 a month earlier. The PMI has not pointed to expansion since April, as the manufacturing sector remains in decline. There was no relief from Construction PMI, which slipped from 45.3 to 44.4, shy of the estimate of 45.8 pts.

Technical Analysis

GBP/USD continues to test resistance at 1.3150. Above, we find resistance at the 1.32 line. On the downside, 1.3050 has some breathing room in support, after GBP/USD posted strong gains on Monday. Below, there is support at 1.30, which has psychological significance.

GBP/USD 1-Day Chart

 

Pacific Currencies – Daily Summary

USD/CNY

Yuan Jumps to 5-Month High

USD/CNY has recorded considerable losses on Tuesday. Currently, the pair is trading at 6.9434, down 0.47% on the day. We have not seen these levels since the first week of August.

AUD/USD

AUD/USD is in the red for a fourth straight day, as the Aussie continues to struggle. Currently, the pair is trading at 0.6908, down 0.42% on the day. There are no economic releases on the schedule. On Wednesday, we’ll get a look at key consumer inflation reports.

NZD/USD

NZD/USD has posted slight losses on Tuesday, erasing the gains made on Monday. Currently, NZD/USD is trading at 0.6652, down 0.24% on the day. There are no New Zealand releases on the schedule.

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