Terence Wu, an FX strategists at OCBC Bank, expects the GBP/USD pair, which trades at 1.25550, to slump towards the 55-DMA at 1.2421 on a break below the 1.25 level. The Bank of England’s Interest Rate Decision and Brexit talks are eyed.
Key quotes
“Expect the GBP/USD to retain a heavy posture, under the lead of the EUR. Expect the cable to test the 1.2500/20 zone, with a breach opening up the path towards 1.2450 and the 55-day MA (1.2421).”
“UK headline CPI prints came in in-line with expectations, but are at the weakest since 2016. The core gauge underperformed. We expect the soft CPI prints to stir up easing expectations at the BOE, with an expansion of its asset purchase programme likely. However, a move to negative policy rates may be a stretch.”
“EU-UK Brexit trade talks are also seeing renewed momentum, but any breakthrough seemed to be some distance away. Suggestions were made on both sides for compromise, but preparations for no-deal is also underway.”
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