GBPUSD, Nasdaq Forecast: Trends in Recovery Mode?

Key Events

BOE Monetary Policy Hearings – Tuesday
UK CPI, Core CPI, and PPI Results – Wednesday
NVDA Earnings – Wednesday
UK and US Flash Manufacturing and Services PMIs - Friday

UK Inflation and GBPUSD Outlook

Following last month’s decline in UK inflation to a 3-year low of 1.7%, falling below the Bank of England’s 2% target, the GBPUSD came under bearish pressure, dropping below the 1.30 mark. This decline was further exacerbated by the US Dollar rally driven by Trump’s post-election momentum.

The BOE’s monetary policy hearing, scheduled for today, is expected to clarify the central bank’s approach, while tomorrow’s November inflation data is anticipated to show a rebound to 2.2%. This potential increase could strengthen support for the pound on the charts and influence market sentiment.

Nasdaq’s Recovery Potential

The Trump rally appears to be recharging after momentum levels stretched on both the US Dollar Index and US indices. Beyond the Trump effect, the tech and AI sector continues to act as a haven, maintaining its uptrend despite market challenges. NVDA’s strong trajectory toward record highs remains intact, with volatility risks expected around its earnings release on Wednesday.

Technical Analysis: Quantifying Uncertainties

GBPUSD Forecast: Weekly Time Frame – Log Scale

Source: Tradingview

The GBPUSD’s dip below the 1.30 mark found potential support at the 1.2590 level, coinciding with the 0.618 Fibonacci retracement of the trend from October 2023 to September 2024. This support aligns with the broader pullback in the DXY from the 107-mark.

Bullish Scenario: A close above the trendline connecting lower highs from July 2014 to May 2021, above 1.30, could revive the uptrend, targeting 1.3150, 1.33, and 1.3430, with further potential toward the 1.37 zone.

Bearish Scenario: A break below the 1.2570 level could extend losses to 1.2370 and 1.2170, reinforcing a prolonged downturn for the pound.

Nasdaq Forecast: Weekly Time Frame – Log Scale

Source: Tradingview

On a weekly time frame, clean support and resistance levels reveal Nasdaq’s pullback from its record 21,230 high, with the index rebounding from the 20,300-support level, aligning with October’s open levels

Bullish Scenario: A rebound above 20,700 would confirm an uptrend continuation toward the 21,300-resistance level, with an extension possible to 21,700.

Bearish Scenario: Failure to hold 20,300 could lead to further corrections to 19,900, 19,600, and 19,200 before confirming a deeper retracement for the index.

Heads up for volatility risks following NVDA’s earnings on Wednesday after the US market close.

--- Written by Razan Hilal, CMT on X: @Rh_waves

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