Trend & Sentiment Have Painted a Clean Picture on Cable

FX:GBPUSD   British Pound/U.S. Dollar
Sterling has three components working in its favor. First, the fundamentals, which show wage pressures are increasing faster than other G4 counterparts in US, EU, & Japan. Wage inflation is a strong predecessor to actual inflation , which is seen as the key component that will push the BoE, or any central bank , to begin raising rates.

Second, the charts are showing a potential breakout toward the low to mid 1.60s. Price is above all key moving averages and the Ichimoku Cloud is showing a full breakout across the board with price and momentum above the cloud.

Lastly, retail traders continue to fight the trend, which often favors trend continuation. As per the Speculative Sentiment Index from DailyFX, The ratio of long to short positions in the GBPUSD             at FXCM             stands at -1.56 as 39% of traders are long. Short positions are 2.1% lower than June 17th and 45.6% above levels seen last week.The combination of current sentiment and recent changes gives a further bullish trading bias.

Prior market pivots are in focus at 1.6050 and if that breaks 1.6523. These levels mark the extremes of September around the volatile Scottish Independence Referendum that ended up keeping Scotland in the UK.
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