Cable has settled to a narrow orbit of 1.2950, near net unchanged on the day after correcting from a 1.2988 intraday high, which left Monday’s seven-month peak at 1.2990 untested. The technical picture has seen most momentum indicators, including the 14-day RSI, at 63 moving sideways, while in the 4 hour chart is at 48 drift lower despite recent new trend highs, which can be an precursor to a trend shift (though proponents of efficient market theory would dismiss this a mere noise). However, GBPUSD seems to satisfy very well the Fibonacci channel drawn on the back of news for French elections since April 18. Therefore, since then Cable seems to continue its upwards tend, with a an intraday support level at 50 period EMA in 4 hour chart, while the strongest support is the phycological 1.2900. Hence a spike below 1.2900 level might suggest a possible reversal of the uptrend.
The BoE’s MPC has commenced its two-day monthly meeting, which is widely expected to finish with a no-change announcement tomorrow with regard to the prevailing 0.25% repo rate and QE totals, while the minutes and the publication of the latest quarterly Inflation Report will see policymakers update forecasts and policy guidance. The recent bounce in the pound and drop in oil prices may see the Old Lady downwardly skew inflation projections, while early Q2 data (PMI survey evidence in particular, which were consistent with Q2 GDP growth rebounding to 0.6% q/q from 0.3% q/q in Q1) may see the BoE upwardly skew growth projections. Hence Cable is possible to re-established a range above 1.3000.
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