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EURUSD: With the pair facing consolidation threats, directional move is now a challenge. Resistance comes in at 1.1700 level with a cut through here opening the door for more upside towards the 1.1750 level. Further up, resistance lies at the 1.1800 level where a break will expose the 1.1850 level. Conversely, support lies at the 1.1600 level where a violation will aim at the 1.1550 level. A break of here will aim at the 1.1500 level. Below here will open the door for more weakness towards the 1.1450. All in all, EURUSD faces further consolidation threats.

BOE voted 7-2 to raise the Bank rate by +25 bps to 0.5%, the first time in over a decade, in November. Two deputy governors, Sir Jon Cunliffe and Sir Dave Ramsden, voted to leave borrowing costs unchanged. BOE voted unanimously to leave the asset purchase program unchanged at 435B pound. Governor Carney declined to comment when the unwinding would begin. Traders have begun to dump British pound ahead of the announcement on profit-taking. The selloff accelerates upon release of the meeting statement and the quarterly inflation report. The rate hike this month is to remediate excessive inflation which has sustainably overshot the +2% target for months. We do not believe UK's current growth momentum, clouded by Brexit uncertainty, justifies further monetary tightening in coming months. Indeed, BOE affirmed that "any future increases in Bank Rate will be at a gradual pace and to a limited extent".

Economic Outlook

BOE forecast steady growth of about +1.7%, while inflation would reach +2.2%, over the next three years. inflation rose to +3% in September, and is expected to "peak above +3% in October, as the past depreciation of sterling and recent increases in energy prices continue to pass through to consumer prices". Carney suggested in the press conference that inflation is "unlikely to return to the 2% target" without a rate hike. Yet, he remained confident that the UK households are "well-positioned" to handle the increase, as the overall monetary policy remains accommodative. Carney also suggested that real wages would gradually pick up soon, as inflation should start to fall next year and wage growth should be boosted by growth in productivity. He added that, despite the improvement, wage growth should remain below historical levels for several years.

Brexit

BOE admitted the Brexit vote has "noticeable impact on the economic outlook". As noted in the accompanying statement, "the overshoot of inflation throughout the forecast predominantly reflects the effects on import prices of the referendum-related fall in sterling. Uncertainties associated with Brexit are weighing on domestic activity, which has slowed even as global growth has risen significantly" It added that "Brexit-related constraints on investment and labour supply appear to be reinforcing the marked slowdown that has been increasingly evident in recent years in the rate at which the economy can grow without generating inflationary pressures".

Monetary Policy

The members judged "it appropriate to tighten modestly the stance of monetary policy in order to return inflation sustainably to target". They also agreed that "any future increases in Bank Rate will be at a gradual pace and to a limited extent". Note that the central bank this time dropped the reference that rate needs to rise more than market expects, signaling it might pause for some time after this increase. BOE's forecasts suggest two more rate rises over the coming three years.

After over a decade, the Bank of England has finally lifted interest rates by 25 basis points, to 0.5% from the 0.25% record low - but Sterling is not amused.

Under normal circumstances, such an auspicious event would have immediately elevated Sterling and boosted sentiment towards the UK economy, however, we are seeing a completely opposite reaction. With the central bank cautioning that future rate increases will be "at a gradual pace" and to "a limited extent", this is clearly a dovish hike which has raised questions over the future path of interest rates beyond November. There is a suspicion that this could be a "one-and-done" move, especially when considering how the unsavory combination of Brexit uncertainty and weakening economic growth continues to weigh heavily on sentiment.

The GBPUSD found itself exposed to heavy losses following the dovish hike, with prices tumbling back below 1.3150. Pound bears have been re-awoken thanks to the BoE, with the next level of interest at 1.3050.

Bitcoin sprints past $7000….

It's another day, another fresh record high for Bitcoin, which soared past $7000 during early trading on Thursday. This has been another incredibly bullish week for the cryptocurrency, with the visible upside attracting investors from all directions. With Bitcoin surging over 640% this year and its total value currently standing at a massive $100 billion, it's fair to say the outlook is increasingly encouraging. It must be kept in mind that Bitcoin's exponential gains are not only phenomenal, but somewhat frightening, and it will be interesting to see where prices close this year.

Taking a look at the technical picture, Bitcoin is extremely bullish on the daily charts. A weekly close above $7000 may inspire buyers to push the cryptocurrency towards $8000. With the upside gaining momentum almost by the day, could Bitcoin hit $10,000 before year end?

Dollar searches for catalyst

The Greenback surprisingly edged lower against a basket of major currencies on Thursday, as investors digested November's relatively hawkish statement from the Federal Reserve.

With the central bank stating that "economic activity has been rising at a solid rate, despite hurricane-related disruptions", expectations of a rate hike in December rose to 96.7%, according to CME's FedWatch tool. Today's main attraction in the United States and risk event for the Dollar, will be President Trump's nomination for the next Chair of the Federal Reserve. With reports confirming that Jerome Powell, who is seen as less hawkish, will be Trump's nominee, it will be interesting to see how the Dollar reacts. Taking a look at the technical picture, the Dollar Index remains bullish on the daily charts. Prices are currently in a wide range, with minor support at 94.40 and resistance at 94.90. A catalyst may be needed in order for the Dollar Index to break from the range, and this could come in the form of Trump's nomination, or with the NFP report on Friday.

Currency spotlight - EURUSD

The Euro has had a calm trading session these past days, when compared to the chaos witnessed last week. With the political drama in Spain ebbing somewhat, after Madrid suspended Catalonia's political autonomy and sacked Carles Puidgemont, investors have redirected their attention towards Europe's fundamentals. On the data front, Eurozone inflation unexpectedly dipped to 1.4% in October, from 1.5% in September, which supported the dovish ECB QE tapering. From a technical standpoint, the EURUSD has traded in a range this week, with support at 1.1600 and resistance at 1.1680. Sustained weakness below 1.1680 may encourage a further decline towards 1.1600 and 1.1500, respectively. In an alternative scenario, prices need to break back above 1.1730 for bulls to jump back into the game.

The British pound has declined sharply against the U.S dollar, hitting 1.3100, following the Bank of England's monetary policy decision. The GBPUSD pair tumbled, despite the BOE hiking UK interest rates 0.25 basis points as expected. The pound declined, as UK policy makers struck a dovish tone towards inflation and the UK economy, inside the BOE Meeting Minutes. Price-action currently trades around the 1.3130 level, as traders now price-in the BOE is unlikely to raise UK rates again this year.

The GBPUSD pair remains strongly bearish while trading below the key 1.3157 technical level. Further selling remain likely towards the 1.3070 and 13023 level, while price trades below 1.3157.

Should price-action break back above the 1.3157 level for a sustained period, further upside towards 1.3200 and 1.3236 should be expected.

The U.S dollar continues to trade higher against the Japanese Yen, hitting 114.22, as the U.S dollar index gains traction following the FOMC policy meeting. Divergence in fiscal policy between the U.S Federal Reserve and the Bank of Japan continues to drive the USDJPY pair. Price-action currently trades above the 114 level, ahead of the Trump administrations pending choice for the new FED Chair, which is set to be announced during today's U.S trading session.

The USDJPY pair remains intraday bullish why trading above the key 113.89 technical level. Further upside should be expected toward the 114.24 and 114.50 resistance levels.

Should price-action trade below the 113.89 level for an extended period, further USDJP selling towards the 113.57 and 114.33 technical support zones remains likely.

A dovish rate hike from the Bank of England on Thursday has triggered a sell-off in the pound while yields on UK debt have also fallen.

We may be jumping to the wrong conclusions prior to the press conference with Mark Carney but the impression that the MPC has given is this is a "one and done" rate hike. Dropping the reference to the market under-pricing future tightening while at the same time referencing the market pricing in two rate hikes over the next three years doesn't suggest another rate hike is planned any time soon.

With inflation expected to return closer to target over the next 12 months, the chance to raise rates may not exist for long and policy makers were clearly keen to seize the opportunity while it still could.

The CAC index is showing little movement in the Thursday session. Currently, the CAC is trading at 5,507.80, down 0.12% on the day. On the release front, French Final Manufacturing PMI remained unchanged at 56.1, missing the estimate of 56.7 points. Eurozone Final Manufacturing PMI improved to 58.5, just shy of the forecast of 58.6 points. On Friday, the US releases a host of employment indicators, led by nonfarm payrolls.

The CAC continues to hover at high levels, and has climbed 2.4% since October 23. On Wednesday, the CAC hit a high of 5536.40, its highest level since January 2008. The CAC was boosted by strong corporate earnings from automobile companies, led by Peugeot and Renault. The French economy continues to post strong numbers, and this has boosted French stock markets. Earlier this week, Flash GDP for the third quarter remained at 0.5%, matching the estimate. Consumer spending rebounded with a gain of 0.9%, beating the estimate of 0.6%. As well, Preliminary CPI improved to 0.1%, matching the forecast.

The Federal Reserve maintained the benchmark interest rate at 1.25%, and there were no nuggets in the rate statement. The Fed indicated that a rate increase is very likely at the December meeting, and was careful not to change any of the wording in its statement regarding future rate hikes. The rate statement noted that hurricanes had caused a decline in payrolls in September, but the Fed did not expect the hurricanes to "materially alter the course of the national economy over the medium term." The markets appear in line with this sentiment, as the forecast for Friday's US nonfarm payrolls is a robust 311 thousand, after a dismal decline of 33 thousand in September. Still, wage growth, which was remained soft despite the strong economy, is expected to slow to 0.2 percent.

Daily Pivots: (S1) 0.8741; (P) 0.8762; (R1) 0.8791; More...

EUR/GBP surges sharply after BoE rate de3cisio and took out 0.8826 minor resistance decisively. Focus is back on 0.9032 resistance. Firm break there will indicate near term reversal and target a test on 0.9305 high. But before that, the fall from 0.9305 could still resume. And break of 0.8732 will target 0.8303 key support.

In the bigger picture, there are various ways to interpret price actions from 0.9304 high. But after all, firm break of 0.9304/5 is needed to confirm up trend resumption. Otherwise, range trading will continue with risk of another fall. And in that case, EUR/GBP could have a retest on 0.8303. But we'd expect strong support from 0.8116 cluster support (50% retracement of 0.6935 to 0.9304 at 0.8120) to contain downside.

Daily Pivots: (S1) 150.73; (P) 151.32; (R1) 151.84; More

GBP/JPY drops sharply after hitting 151.92 but downside is contained above 148.88 minor support so far. Outlook is unchanged. While choppy recovery from 149.62 could still extend, firm break of 152.82 is needed to confirm medium term rally resumption. Otherwise, consolidative trading from 152.82 should extend with another falling leg. Break of 148.88 minor support will turn bias to the downside through 146.92 to 61.8% retracement of 139.29 to 152.82 at 144.45.

In the bigger picture, medium term rebound from 122.36 is still expected to resume after corrective pull back from 152.82 completes. Firm break of 38.2% retracement of 196.85 to 122.36 at 150.43 will carry long term bullish implications. In that case, GBP/JPY could target 61.8% retracement at 167.78. However, break of 139.29 will indicate rejection from 150.43 key fibonacci level. And the three wave corrective structure of rebound from 122.36 will argue that larger down trend is resuming for a new low below 122.26.

Daily Pivots: (S1) 113.75; (P) 114.01; (R1) 114.43; More...

Intraday bias in USD/JPY remains neutral as consolidation from 114.44 is still in progress. Another fall cannot be ruled out. But after all, near term outlook will remain cautiously bullish as long as 111.64 support holds. Decisive break of 114.49 key resistance will confirm that correction pattern from 118.65 has completed at 107.31 already. And USD/JPY should then target a test on 118.65. However, sustained break of 111.64 will argue that rebound from 107.31 has completed and bring retest of this low.

In the bigger picture, medium term rise from 98.97 (2016 low) is not completed yet. It should resume after corrective fall from 118.65 completes. Break of 114.49 resistance will likely resume the rise to 61.8% projection of 98.97 to 118.65 from 107.31 at 119.47 first. Firm break there will pave the way to 100% projection at 126.99. This will be the key level to decide whether long term up trend is resuming.