Upside hopes for the GBP?

14 January, 2021

The British monthly GDP is announced on Friday at 09:00 MT time. In December, Rishi Sunak, Chancellor of the Exchequer, said that the British economy hasn’t seen an economic crisis like the current one in the last 300 years. Brexit had its impact but has never been the main driver: fundamentals are what matters. And fundamentals are hardly positive for the UK at the moment, in most aspects of its economic well-being.

The labor market is slowly picking up, but the overall state of affairs is quite difficult. Ultimately, it is all reflected in the country’s output: if it is lower than expected, it may press hard on the GBP.

If the data is better-than-thought, the GBP will be boosted. Otherwise, it will fall.

  • GBP/JPY: The pair is trading above the cloud. An upward pressure would lead the pair to exit further the cloud, confirming a bullish outlook.
  • XAU/USD: Gold is trading above the 23.6% retracement area. Bullish trend remains weak.

US Market View

US stocks are seen opening higher Tuesday, rebounding from the previous session’s losses with investors looking for additional fiscal stimulus amid continued political turmoil. The United States lost more than 22 000 lives to Covid-19 last week, a second straight weekly record. The overall death toll is now 375 000. The current surge, and the associated economic damage, prompted President-elect Joe Biden to promise further economic stimulus “in the trillions of dollars” late last week. More details are expected to follow in a formal announcement on Thursday, something that is supporting markets at their current elevated level.

USA Key Point

  • Gold gains 1% on the day as buyers keep a defense of key support level
  • German chancellor Merkel expects lockdown to last until early April
  • The GBP is the strongest and the USD is the weakest
  • European equities pare gains as sentiment stays rather mixed on the session

Source   Presented by FBS
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