Cable has rallied on the back of the softer post-U.S. jobs report dollar. The pair today logged a one-week high of 1.2240. The UK government is on the verge of triggering Article 50 of the Lisbon Treaty to start the process of leaving the EU as soon as tomorrow. The government should have sufficient votes for the Brexit bill be passed by MPs today, and a follow-up vote in the House of Lords tomorrow would also likely be approved. This won’t be a surprise for markets, but the focus will quickly turn to the response of EU negotiators. The pound has been under performing over the last two weeks, though has rallied today, which is reported to be position squaring as recent futures data suggested that speculative accounts had run up a sizable net short exposure. The CFTC report on Friday showed that as of close of business on Tuesday March 7, 2017 there was an increase in net short positions on the GBP of 15,000 contracts for the week up to 81,000 from 66,000.
UK economic data has been showing the economy to have entered stagnation as rising prices squeeze household spending power. This backdrop may see the BoE turn slightly move dovish in rhetoric, albeit while retaining a neutral policy stance, at this week’s MPC meeting (announcement and minutes due Thursday). The 1 hour chart has strong resistance at 1.2215 and a support zone between 1.2198 and 121.80. A sustained break of the key higher time frame moving average around 1.2215 by the lower time frame moving average is likely to see a move higher towards the daily high at 1.2240.
Click here to access the HotForex Economic calendar.
Want to learn to trade and analyse the markets? Join our latest webinar and get analysis and trading ideas combined with better understanding on how markets work.
Click HERE to register the next webinar will start in:
Senior Market Analyst
Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.