- GBP/USD is making tracks towards the reverse hourly H&S’s neckline as the dollar is sold off.
- ECB was said to set the June 14 as a “live meeting”.
The ECB was said to set the June 14 as a “live meeting where Bloomberg reported that policymakers anticipate holding a pivotal discussion that might conclude with an announcement on when the Central Bank intends to stop buying bonds. This has sent the DXY off a small cliff and to below the 94 handle to 93.82 the lows of the day within the day’s range of 93.8220-94.3160. The pound is now marching back to the highs of the day that had been made after the stronger than expected services and composite PMI’s,(54.0 vs 53.0 consensus). The highs are located at 1.3393.
BoE rate hike expectations heightened
“BoE rate expectations are extending their recent recovery and OIS are now pricing in 7bpts of tightening for August and 17bpts by November. BoE headline risk remains elevated as we look to upcoming speaking engagements from McCafferty and Ramsden, ” analysts at Scotiabank argued. The speeches come on Wednesday and Thursday. Meanwhile, traders are keeping the ears to the ground for Brexit related headlines as well. However, UK’s PM May is said to have been planning on delaying the publication of the government’s blueprint until after this month’s leaders’ summit.
GBP/USD levels
On a break of the neckline, eyes are on the 50-W SMA 1.3461 on the upside. The convergence of the 200-D SMA and 1.3583/1.3600 tops comes as the upside target thereafter. The 1.3708 level at the 50% Fib of 1.3040-1.4377 remains compelling on the wide. “We look for a small correction higher, the Elliott wave count is pointing to a corrective rebound to the 1.3500/1.3600 area, which is fairly tepid. Below 1.3200 will trigger losses to the 1.3040 October low. Initial resistance is the 20-day ma at 1.3406, which is currently holding,” analysts at Commerzbank explained.
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