Cable has been coat-tailing EURUSD over the last day, today logging a three-session peak of 1.4213. in lockstep with the euro making a fresh peak versus the greenback. Sterling has been unaffected by yesterday’s leaked government report showing that the UK economy would be worse off under three different Brexit scenarios, which has been downplayed by a spokesperson of the PM and various other ministers. Data showing mortgage approvals at a near three-year low also cast little impact on the pound. BoE Carney testified before a House of Lords committee yesterday. He said that “the important thing with policy now” is that “slack in the economy has been taken out” and that “a more conventional area for monetary policy,” focused increasingly on returning inflation sustainably to target, is happening. He said that labour market has continued to tighten, and that there is a firming of wages. albeit “gradual.” Carney’s remarks had little impact, with markets looking to next week’s quarterly inflation report from the BoE for guidance.
Meanwhile EURGBP retraced in London opening, as German unemployment rate falls to a new record low and Eurozone HICP inflation fell back to 1.3% y/y. The EURGBP took back more than the half losses seen yesterday, by breaking above all 3 Moving averages ( 20, 50 and 200 period EMAs in the hourly charts) and reaching the round 0.8800 level. This does not necessarily means that we will see a limitation of the consolidation seen this week between 0.8700-0.8800, however intra -day suggests that bulls appear to gain the control back.
The closure of the strong hourly bullish candle just now 50pips above today’s low and above the 50% Fibonacci level since January 12, suggests that the pair is likely to have swing higher up to resistance area at 0.8830-0.8850. This area is a confluence of 61.8% Fibonacci level, the highest up fractals and also the 200-period EMA in the 4-hour chart. By having this in mind we are anticipating for a possible short-term uptrend.
Intra-day momentum indicators have turned positive again, with the RSI and MACD above neutral in the 4-hour charts. In the hourly chart, the MACD oscillator is still moving in the negative territory below the trigger line but is moving with stronger momentum than before. Looking on the 4-hour and Daily timeframe, the pair has been in an uptrend for a week , supported by higher highs and higher lows.
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