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Pound remains in narrow range ahead of US Open

Market Analysis

GBPUSD, H1 and Daily

The pound is trading with little direction presently, and is at near net unchanged levels on the day so far versus the dollar and other majors. Cable has settled in the mid-to-upper 1.39s after tumbling yesterday over a big figure from the day’s high to a 1.3928 low. The pound didn’t see a lasting bid following remarks by BoE Deputy Governor Ramsden, yesterday, a dove who now sees the case for hiking sooner than later. Markets are already discounting a further rate hike after the BoE last November lifted the repo rate for the first time in over a decade. The latest Reuters poll found a consensus expectation for the BoE to hike the repo rate another 25 bp May.

Cable has been plying a sideways for nearly a month, and hence in such a long-term time-frame is likely to present more of the same for now, as 200-weeks EMA flattened out during the last 6 weeks. Meanwhile, in a Daily time-frame, during 2018, Cable forms a Falling Wedge pattern, which consider be a bullish candlestick pattern. Hence despite consolidation noticed, a falling wedge breakout to the north along with the fact that pair is holding well above the 50-DAY SMA for 4 months now, strengthen the bullish view on pound in long-term. Looking the indicators, RSI is flattering at neutral zone, while MACD lines have weaken but they are still moving on the positive territory. Support comes at 1.3800-1.3895.

In short-term, GBPUSD, has presented today a limited negative momentum on London open, with the price action sloping down to 1.3944, from day’s high at 1.3995. However, with the pair unable to break below the recent down fractals and the lower Bollinger pattern in the hourly chart, is likely to see GBPUSD, retesting  yesterday’s highs. A break above the 1.4000 level could confirm a possible retest of the 1.4060 level. Intra-day support is at 1.3920.  A break below this could triggered a short position with possible target at 1.3850.

The next items on the UK agenda include consumer confidence and lending data from the BoE, on Thursday, and the February PMI surveys for the manufacturing and construction sectors, due on Thursday and Friday, respectively. However Powell’s speech today, expected to add volatility in the market.

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Andria Pichidi

Market Analyst

HotForex

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