BoE’s FPC report moved the Market

GBPUSD, H1

The dollar has posted a decent rebound after posting fresh lows versus the euro and other currencies. The narrow trade-weighted USD index (DXY) is showing a gain of 0.3% presently, at 89.29, retracing about two thirds of the decline seen over the last day, which earlier left a six-week low at 88.94. There doesn’t appear to be a specific news or data catalyst behind the move, though it seems that a combo of a rebound in the dollar, stop orders and the latest BoE Financial Policy Committee report, which highlighted Brexit risks, have conspired to pressure Cable and the pound more generally. The BoE’s Monetary Policy Committee had also repeated its concern about Brexit-related uncertainties on business and household spending.

Hence, Sterling came under particular pressure today, presently showing just over a 0.5% decline versus the dollar and respective 0.4% losses against the euro and yen. Cable has tumbled from intraday highs near 1.4245 to sub- 1.4123 levels, breaching both yesterday’s low at 1.4152 on route and a trend-line support at 1.4176-77. However, despite weakness seen today, Cable continues, as being in process of establishing a range in the low-to-mid 1.4000s, after rising from early-March levels near 1.3700. Therefore, a trend reversal to the downwards in long-term, could be consider possible only if the pair breaks below the round psychological level at 1.4000. Meanwhile, intra-day a rebound today and a return back above the 50% Fibonacci retracement in the hourly chart, at 1.4180, could triggered again a long position with targets at recent highs at 1.4240. The current immediate support is at the 200-period EMA at 1.4083.

Elsewhere, EURUSD has dropped under 1.2420 after clocking a six-week high at 1.2476. USDJPY has been an exception to broader dollar moves, once again, with the pair lifting out of an earlier dip to 105.45, and holding a net gain on the day. The revival in risk appetite has markets price out the yen’s safe haven premium.

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Andria Pichidi

Market Analyst

HotForex

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