Both British pound and euro traded higher against the U.S. dollar Thursday, although the dollar was also strong against other currencies. The dollar received a boost after Arizona Senator John McCain said he would support the tax plan but the tax reform bill is still far from done and dusted. Votes on the tax bill will resume today and while this could be dollar-positive we bear in mind that the markets are very sensitive to tax headlines.
On the economic docket, the ISM Manufacturing report due at 15:00 UTC will receive most attention while manufacturing in the U.S. is expected to remain robust in November.
Technically speaking, we continue to favor the upward trend in both EUR/USD and GBP/USD. The pound climbed above 1.35 and was able to stabilize above that threshold. If the cable is able to take the next hurdle at 1.3550, we probably see a run for 1.36 and possibly even 1.3650. The uptrend is considered intact as long as prices remain above 1.3450/1.34. For the sentiment to sour the pound would need to break below 1.3370.
Sterling traders may keep an eye on the U.K. PMI Manufacturing at 09:30 UTC.
The euro headed towards 1.1950 after it re-tested the 1.18-support level. If the euro climbs above 1.1935 we expect further gains towards 1.20. If 1.1930 however holds, remaining a short-term resistance for euro bulls, the single currency could fall back towards 1.1830 and 1.18.
We wish you good trades and a wonderful first weekend of December.
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