FX Week Ahead: Biden Stimulus Speech; China Manufacturing PMI; UK GDP; US Manufacturing PMI; US NFP

03/31 WEDNESDAY | 00:30 GMT | CNY NBS MANUFACTURING PMI (MAR)

Tensions between the US and China are heating up, with many indications suggesting that the Trump-inspired US-China trade war will continue with under the Biden administration – and perhaps intensify. Ahead of anything else intensifying, data releases are due to show that China’s manufacturing sector is still growing, but barely. The March China NBS manufacturing PMI is expected to cross the wires with a reading of 51.2, according to a Bloomberg News survey, up from the 50.6 reading in February.

03/31 WEDNESDAY |06:00 GMT | GBP GROWTH RATE (4Q’20)

Even as the UK remains among the best in the world in terms of vaccination rates, the outbreak of the B.1.1.7 mutation of COVID-19 still managed to slow things down at the end of last year. According to a Bloomberg News survey, the final UK growth rate update for 4Q’20 is due to show a slight improvement, from -8.7% to -7.8% (y/y). Nevertheless, any issues seen in the final 4Q’20 UK GDP data may be overlooked as markets continue to look forward to the UK regaining its pre-COVID economic potential.

IG CLIENT SENTIMENT INDEX: GBP/USD RATE FORECAST (MARCH 29, 2021) (CHART 1)

FX Week Ahead - Top 5 Events: Biden Stimulus Speech; China Manufacturing PMI; UK GDP; US Manufacturing PMI; US NFP

GBP/USD: Retail trader data shows 51.55% of traders are net-long with the ratio of traders long to short at 1.06 to 1. The number of traders net-long is 1.03% lower than yesterday and 21.51% lower from last week, while the number of traders net-short is 14.46% higher than yesterday and 13.02% higher from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests GBP/USD prices may continue to fall.

Yet traders are less net-long than yesterday and compared with last week. Recent changes in sentiment warn that the current GBP/USD price trend may soon reverse higher despite the fact traders remain net-long.

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