Morning outlook - GBP/USD loses 100 points
Although inflation report matched with forecasts and Governor Carney once again admitted possibility of interest rate hike, the Pound lost almost 100 points against the Dollar just in couple of hours. Such keen reaction shows that the main investors’ concern is related to success of the Brexit talks. From technical perspective, the cable passed through the 200-hour SMA and now is facing to other support barriers on its way up until the 38.2% Fibonacci retracement level at 1.3145. In this sense, the pair is expected to continue to slip to the bottom. However, there is a need to take into account that after such sharp falls traders usually tend to restore lost positions, which means that an area near 1.326 might become a target once again (as long as market sentiment remains predominantly bullish).
Although inflation report matched with forecasts and Governor Carney once again admitted possibility of interest rate hike, the Pound lost almost 100 points against the Dollar just in couple of hours. Such keen reaction shows that the main investors’ concern is related to success of the Brexit talks. From technical perspective, the cable passed through the 200-hour SMA and now is facing to other support barriers on its way up until the 38.2% Fibonacci retracement level at 1.3145. In this sense, the pair is expected to continue to slip to the bottom. However, there is a need to take into account that after such sharp falls traders usually tend to restore lost positions, which means that an area near 1.326 might become a target once again (as long as market sentiment remains predominantly bullish).
Comment:
GBP/USD falls to 1.3110
Due to signs of negative temps of growth of the British retail sales, the Pound continued to actively lose value against the Dollar. In result of the downfall, the cable slipped to the 1.3100 zone but then made a rebound, which additionally confirmed existence of a large ascending channel. Such outcome suggests that the pair is likely to climb back to the area near the 1.3160 mark.
In larger perspective the further recovery of the Sterling seems complicated, as northern side remains reliably protected not only by a combination of moving averages, but also by the upper-trend line of a dominant descending channel, which most probably will prevail over less robust ascending channel. On the other hand, expectations of a possible interest rate hike and uncertainty related to Brexit negotiations do not make this scenario undoubted.
Due to signs of negative temps of growth of the British retail sales, the Pound continued to actively lose value against the Dollar. In result of the downfall, the cable slipped to the 1.3100 zone but then made a rebound, which additionally confirmed existence of a large ascending channel. Such outcome suggests that the pair is likely to climb back to the area near the 1.3160 mark.
In larger perspective the further recovery of the Sterling seems complicated, as northern side remains reliably protected not only by a combination of moving averages, but also by the upper-trend line of a dominant descending channel, which most probably will prevail over less robust ascending channel. On the other hand, expectations of a possible interest rate hike and uncertainty related to Brexit negotiations do not make this scenario undoubted.
Due to release of mixed British employment data, the pair did not get a necessary impulse to make significant moves yesterday. In particular, this relates to three unsuccessful attempts made by bears to push the rate through the 38.2% Fibonacci retracement level at 1.3145. As a result, the new trading session cable started at the intersection of the 55- and 200-hour SMAs.
At the moment, the further recovery of the Pound against the Dollar seems complicated, as northern direction is blocked not only by a combination of the weekly PP and the 100-hour SMA but also by the upper trend-line of a senior descending channel. However, a release of better than expected information about the retail sales might create a momentum that would help traders to push the pair either through these barriers or in the opposite direction.