Should we keep a close eye on the pound, which is facing resistance at higher levels?

Should we keep a close eye on the pound, which is facing resistance at higher levels?

02.11.2022

In the previous day’s U.S. currency trading, the U.S. dollar rose after the October U.S. Manufacturing PMI and the ISM Manufacturing Index both exceeded market expectations.The EUR/USD pair fell by about 100 pips from 0.9952 to 0.9851, marking its fourth consecutive day of decline. Technically, the EUR/USD is trading just below the daily 20-day moving average (MA). If it breaks below the daily 20-day MA, the 4-hour 200-day simple moving average (SMA) will act as support, so we will be watching to see if the pair rebounds at the 4-hour 200-SMA level of 0.9827.

Like the euro, the pound came under pressure against the U.S. dollar. The GBP/USD pair fell by approximately 130 pips from 1.1564 to 1.1439. The decline halted as the pair found support at the 200-period simple moving average (SMA) on the hourly chart.Although the UK’s October Manufacturing PMI, released yesterday, exceeded the market forecast of 45.8, it was unable to withstand the rise of the US dollar. Since GBP/USD is forming a descending flag on the hourly chart, we should watch for a gradual decline to around 1.135 on a weekly basis.

Today, during European trading hours, Germany’s trade balance will be released at 16:00, France’s budget balance at 16:45, France’s manufacturing PMI at 17:50, Germany’s unemployment rate at 17:55, and the Eurozone’smanufacturing PMI, the U.S. MBA Mortgage Applications Index at 8:00 PM, and the U.S. ADP Employment Report at 9:15 PM. During U.S. trading hours, the U.S. weekly crude oil inventory report is scheduled for 11:30 PM, followed by the FOMC policy rate decision and statement at 3:00 AM, remarks by German Bundesbank President Nagel, and a press conference by Fed Chair Powell at 3:30 AM.I plan to closely monitor the pound, which is facing resistance on the upside, while keeping a close eye on currency strength dynamics.