- Dovish BOE-speaks and stalled USD selling knocked-off Cable to mid-1.34s.
- Focus shifts to the UK CPI report due tomorrow for next direction.
The GBP/USD pair is seen experiencing good two-way price-movements in the European session, as markets digest the dovish and cautious remarks from the key Bank of England (BOE) policymakers following their testimony on the inflation and economic outlook before the Parliament’s Treasury Select Committee (TSC).
Cable’s recovery ran into resistance just shy of the 1.3500 barrier that knocked off the rates back towards the midpoint of the 1.34 handle. The spot managed to find fresh buyers ahead of the last, now reverting to the upper band of today’s trading range near 1.3475 levels.
The downside in the major remained short-lived, as the US dollar continues its corrective move lower across the board, despite the 10-year Treasury yields attempting a bounce from weekly lows at 3.050%.
Moreover, the pound also remains underpinned by the rally in oil prices while the recent Brexit optimism also keeps the recovery-mode intact in GBP/USD, as Brexit talks resume for the first time since the UK PM Theresa May met with her European Union (EU) counterparts and offered a compromise on customs.
Looking ahead, “investors this week will also confront the release of latest UK consumer inflation figures and monthly retail sales data. This along with the release of latest FOMC meeting minutes and the US durable goods orders will further help investors determine the pair’s next leg of the directional move,” FXStreet’s Analyst, Haresh Menghani wrote.
GBP/USD Technical Levels
According to Slobodan Drvenica at Windsor Brokers, “Bearish signal would be generated on a repeated close below 1.3451/42 pivots, which would open the way towards higher base at 1.33 zone (Dec 2017). Conversely, bears could be delayed on close above 1.3451, but close above 10SMA (1.3503) is needed to confirm and expose next strong barrier at 1.3560 (200SMA). Res: 1.3482; 1.3503; 1.3560; 1.3589 Sup: 1.3412; 1.3390; 1.3354; 1.3302.”