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Currency pair GBP/USD

The GBP/USD is building a triangle above the broken resistance trend line (dotted red). Price was unable to break below the long-term support trend line (blue) and is now retesting the Fibonacci levels of wave 4 vs 3 (green). A break above the 61.8% Fib however makes a wave 4 unlikely.

The Bank of England (BOE) is expected to raise interest rates by a quarter percent for the first time in a decade. The rate hike could potentially send the GBP higher, although the currency pair will remain volatile as well during the inflation report, policy summary and press conference of the Bank of England Governor.

The GBP/USD is showing strong bullish momentum and could be in a wave 4 (blue) if price stays above the support trend line (blue). A bearish break could indicate that the wave A (brown) has been completed at the recent high.

Currency pair EUR/USD

The EUR/USD is still building a bullish retracement within wave 4 (blue). A break below the support of the sideways zone (green) could indicate the continuation of the wave 5 (blue) within a larger wave C (purple).

The EUR/USD will most likely complete the wave 4 (blue) if price breaks below the channel (green). In the meantime, price could retrace to deeper Fibonacci levels of wave 4 (blue) but typically should not break above the 61.8% Fibonacci level.

Currency pair USD/JPY

The USD/JPY strong bullish bounce is most likely indicating that one more bullish push is likely towards the 115-resistance level.

The USD/JPY needs to break above the resistance trend line (red) and small bull flag chart pattern (dotted red) to continue towards the Fibonacci targets at 115.

The Bank of England is widely expected to raise UK interest rates for the first time in 10 years today. An expected 0.25% rise, to 0.5%, will push UK interest rates back to pre-Brexit levels. UK inflation climbed to a 5 year high of 2.9% in August, significantly above the Bank of England's Monetary Policy Committee (MPC) target of 2% and September saw the rate increase to 3%. Recent data has indicated that the UK economy is performing better than expected, with growth rising to 0.4% in Q3 which, to many, is an indication that a rate hike will not adversely affect growth. The MPC stated in September that a 'majority' of members believed that some withdrawal of stimulus would be appropriate if the economy continues to grow at a steady pace. The markets are 'pricing-in' a 91.2% probability of a rate hike today. If the BoE does not raise rates the markets will put downward pressure on GBP. If rates rise, as expected, there may only be slight upward pressure on GBP, as the markets have already factored in a hike. Regardless of the announcement, we are likely to see volatility in GBP.

In the US on Wednesday, the US the Federal Reserve, as expected, kept interest rates unchanged. The Fed underscored recent data that indicates solid economic growth and a strengthening labor market. The markets are now expecting the Fed to hike rates in December. The ADP employment report on Wednesday said the private sector added 235K jobs last month, more than the 196K the markets had forecast. The better-than-expected ADP data suggests an improving job market, even aside from the recent storms. Such strong data is indicating the US has the resiliency to endure a rise in interest rates. The markets will be looking ahead to Friday's always impactful Non-Farm Payroll release for further confirmation of a robust labor market, which will, inevitably, underscore the likelihood of a December rate hike.

EURUSD is 0.3% higher in early trade at around 1.1656.

USDJPY is 0.2% lower in early Thursday trading at around 113.90.

GBPUSD has edged 0.3% higher overnight ahead of today's interest rate decision. GBPUSD is currently trading around 1.3285.

Gold has gained 0.36% on USD weakness to currently trade around $1,278.75.

WTI is little changed, currently trading around $54.35.

Major data releases for today:

At 09:00 GMT, the Bundesagentur für Arbeit published by the German Statistics Office will release the Unemployment Rate s.a. & Change for October. The rate is forecast to be unchanged at 5.6% with the change forecast at -11K, which is not as strong as the previous release of -23K.

At 09:30 GMT, the UK Chartered Institute of Purchasing & Supply and Markit Economics will release UK PMI Construction for October. The forecast is expected to show a slight decline to 48.0 from September's release of 48.1.

At 12:00 GMT, the Bank of England will announce its interest rate decision. The markets are expecting a hike of 0.25%, taking UK interest rates to 0.5%. Analysts are unanimous that the BoE will raise rates for the first time in 10 years, bringing UK interest rates back to pre-Brexit levels. The BoE will also release its Quarterly Inflation report, Monetary Policy Statement and Asset Purchase Facility, all of which will be overshadowed by the interest rate decision. Regardless of the interest rate decision the markets are likely to see higher volatility in GBP.

At 12:30 GMT, Bank of England Governor Mark Carney is scheduled to deliver a speech outlining the rationale behind the 12:00 noon interest rate decision. The markets will be looking for clues as to future monetary policy and the timing of future interest rate hikes.

The British pound continues to trade higher against the U.S dollar, despite a brief pullback, following a hawkish FOMC policy statement. FOMC policy makers yesterday kept interest rates on hold, but paved the way for a December rate hike. The GBPUSD pair currently trades around the 1.3280 level, head of today's key Bank of England interest rate decision and monetary policy statement.

The GBPUSD pair remains bullish while trading above the 1.3268 technical level. Further upside should be expected above 1.3267, towards the 1.3307, 1.3360 and 1.3400 levels.

Should price-action dip below the 1.3267 technical level, a further decline towards the 1.3236 and 1.3202 levels remains likely.

The euro is back under selling pressure against the U.S dollar, after being sharply rejected from its 200-day moving average, at the 1.1670 level. Better than expected U.S jobs figures and a hawkish FOMC policy statement have shifted buyers back into the U.S dollar index. The EURUSD pair currently trades around the 1.1650 level, ahead of the release of key eurozone manufacturing figures for the month of October.

The EURUSD pair remains bearish while trading below the 1.1670 technical level, intraday euro sellers will likely push the euro back towards the 1.1644 and 1.1610 support levels.

Should EURUSD buyers push price-action back above the 1.1670 level, intraday trading sentiment will likely turn bullish. Further upside towards 1.1690 and 1.1713 remains likely.

Bitcoin has been on an absolute tear as of late, with prices adding a staggering $1,000 over the past five days en route to new record highs.

BTC/USD reached a session high of $6,905.19 on Thursday, giving the digital asset a total market cap of $114 trillion. There are more than 16.659 bitcoin tokens in circulation, a figure that will continue to rise until the total reaches 21 million sometime around 2140.

Prices were last seen trending around $6,860, having gained more than 17% over the past five days. As one might expect, the extent of the rally has pushed bitcoin into overbought territory on the Relative Strength Index (RSI).

The world’s biggest cryptocurrency by market cap will fork into two on or about 16 November. That’s when the new SegWit2x protocol will be initiated. Miners say the new coin is unlikely to overtake bitcoin. What it will do, however, is generate significant volatility in certain pockets of the market.

Bitcoin has forked on two separate occasions this year, leading to the creation of Bitcoin Cash (BCH) and Bitcoin Gold (BTG).

Thursday is another action-filled day in the markets, as investors await a potentially landmark policy announcement from the Bank of England (BOE). The BOE is widely expected to raise interest rates as inflation continues to overshoot the central bank's 2% target.

On the data front, IHS Markit will release a bevy of PMI reports on Thursday covering Spain, Italy, France, Germany and the broader Eurozone. The final Eurozone manufacturing PMI is expected to hit 58.6 for October.

The BOE will likely raise rates by 25 basis points on Thursday, according to a consensus market forecast. That brings the rate back up to 0.5%, where it stood between 2009 and August 2016. The central bank quickly slashed rates in the wake of Brexit to avoid any potential downside risks following the landmark referendum. Six of nine Monetary Policy Committee (MPC) members are expected to vote for a hike.

That being said, policy normalization is still a distant pipedream. The UK's asset purchase facility is expected to hold steady at £435 billion per month.

In North America, the Labor Department will report on jobless claims, unit labor costs and nonfarm productivity at 12:30 GMT. The Institute for Supply Management (ISM) will release its New York business conditions index at 13:45 GMT.

Earlier in the day, the Australian government reported a much bigger than expected trade surplus for the month of September, as exports rose 3% and imports flat-lined. Canberra's trade surplus climbed to $1.745 billion in September, more than double the previous month's $873 million.

A separate report also showed an unexpected pick up in building permits. Australian building authorizations climbed 1.5% in September, following a downwardly revised gain of 0.1% the month before.

GBP/USD

The British pound could be in for an active session as the BOE signals for higher interest rates. Cable, which currently trades around 1.3280, is looking to overcome the critical resistance of 1.3336. That represents the high from October. Certainly, momentum generated from the BOE announcement could send prices north of that level. The BOE holds all the cards on Thursday.

AUD/USD

After a disastrous two weeks, the Australian dollar appears to be finally bouncing back. The AUD/USD exchange rate climbed half a percent on Thursday to reach 0.7716. The pair is bouncing from a test of the double bottom lows near 0.7620. Immediate support levels are located at 0.7650 and 0.7610. On the flipside, resistance is likely found at 0.7730 and 0.7775.

EUR/USD

Europe's common currency advanced on Thursday, although prices remained firmly capped below 1.1700 US. EUR/USD levels to watch include the 1.1670 resistance area. On the opposite side of the ledger, the region near 1.1600 provides a solid psychological support.

Key Highlights

• The British Pound started a nice uptrend from well below 1.3100 against the US Dollar.
• The GBP/USD pair surged higher recently and broke two important bearish trend lines at 1.3250 on the 4-hours chart.
• UK's Manufacturing PMI in Oct 2017 rose from the last reading of 55.9 to 56.3.
• Today, the BOE's interest rate decision is scheduled and the central bank is likely to raise rates from 0.25% to 0.50%.

GBPUSD Technical Analysis

The British Pound traded below the 1.3100 support on Oct 27, 2017 against the US Dollar. Later, the GBP/USD pair formed a solid support, started an uptrend and moved above 1.3200.

During the upside move, the pair was successful in breaking two important bearish trend lines at 1.3250 on the 4-hours chart. The pair also settled above the 100 simple moving average (H4, red), currently at 1.3210.

At present, the pair is struggling to settle above the 200 simple moving average (H4, green) at 1.3300. Should there be a close above 1.3300, there can be an upside drift towards the 1.3350 and 1.3400 levels.

On the downside, the broken resistance at 1.3250 may now act as a decent support if the pair corrects lower from the current levels.

UK Manufacturing PMI

Recently in the UK, the Manufacturing Purchasing Managers Index (PMI) for Oct 2017 was released by both the Chartered Institute of Purchasing & Supply and the Markit Economics. The forecast was lined up for a minor decline from the last reading of 55.9 to 55.8.

The actual result was better than the forecast, as the UK's Manufacturing posted an increase from 55.9 to 56.3. According to the report, both output and new order growth remain solid.

Commenting on the release, the Director at IHS Markit, Rob Dobson, stated:

UK manufacturing made an impressive start to the final quarter of 2017 as increased inflows of new work encouraged firms to ramp up production once again. The sector looks to be achieving a quarterly rate of expansion close to 1%, therefore sustaining the solid pace of growth signalled by the official ONS estimate for the third quarter.

Overall, the GBP/USD pair remains in an uptrend and if the BOE decides to increase rates in today's decision, there can be more upsides toward 1.3350-1.3400.

Economic Releases to Watch Today

BoE Interest Rate Decision – Forecast 0.50%, versus 0.25% previous.

Germany's Unemployment Change for Oct 2017 – Forecast -11K, versus -23K previous.

Germany's Unemployment Rate for Oct 2017 – Forecast 5.6%, versus 5.6% previous.

Euro Zone Manufacturing PMI for Oct 2017 – Forecast 58.6, versus 58.6 previous.

Germany's Manufacturing PMI for Oct 2017 – Forecast 60.5, versus 60.5 previous.

Spanish Manufacturing PMI for Oct 2017 – Forecast 54.9, versus 54.3 previous.

France Manufacturing PMI for Oct 2017 – Forecast 56.7, versus 56.7 previous.

Italian Manufacturing PMI for Oct 2017 – Forecast 56.8, versus 56.3 previous.

US Initial Jobless Claims – Forecast 235K, versus 233K previous.

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

GBP/JPY's choppy recovery from 146.92 resumed by taking out 151.38. Further rise could be seen to 152.82. But firm break there is needed to confirm medium term rally resumption. Otherwise, consolidative trading from 152.82 could still extend with another falling leg. Break of 148.88 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.

With price having come down so far so fast in the midst of political uncertainty, there was always going to be a pause at this major higher time frame support level.

You can see that price is now starting to have a bit of a bounce, but whether there is any substance behind a move in a pair with huge bearish sentiment behind it, is yet to be seen.

I’m happy to stay flat on Kiwi and just monitor the level for now.

EURUSD

The EURUSD had another indecisive movement yesterday. The bias remains neutral in nearest term but as long as stay below 1.1900 I still prefer a bearish scenario with nearest target seen at 1.1450. Immediate resistance is seen around 1.1670. A clear break above that area could trigger further bullish pressure testing 1.1725 region but any upside pullback should be seen as a good opportunity to sell. Immediate support is seen around 1.1575. A clear break and daily close below that area would expose 1.1450 region or lower as a part of the “head and shoulders” bearish reversal scenario as you can see on my daily chart below.

GBPUSD

The GBPUSD attempted to push higher yesterday topped at 1.3320 but closed lower at 1.3243. The bias is neutral in nearest term. The market still respects 1.3330 key resistance which need to be clearly broken to the upside to resume the major bullish trend retesting 1.3615 area. Immediate support is seen around 1.3200. A clear break below that area could trigger further bearish pressure testing 1.3150 or lower but key support remains at 1.3000. Overall I remain bullish.

USDJPY

The USDJPY continued to trade higher yesterday topped at 114.28. The bias remains bullish in nearest term testing 114.50 key resistance which is a good place to sell with a tight stop loss as a clear break above that area could trigger further bullish pressure testing 115.50 or higher. Immediate support is seen around 113.75. A clear break below that area could lead price to neutral zone in nearest term testing 113.20 support area. Overall I remain neutral.

USDCHF

The USDCHF had a bullish momentum yesterday topped at 1.0037. The bias is bullish in nearest term especially if price able to make a clear break above 1.0037 testing 1.0100 or higher. Immediate support is seen around 1.0000. A clear break below that area could lead price to neutral zone in nearest term but as long as stay above 0.9940 the overall short term bias should remain to the upside. Overall I remain bullish.