While the markets await Carney at the top of this hour, who is due to speak at the Society of Professional Economists’ annual dinner, in London, analysts at Scotiabank explained that Sterling is developing a likely inside range day on the daily chart and has been able to grind back up following the formation of a positive, short-term signal around the 1.33 area yesterday.
“Sterling is well supported this morning following the release of better than expected UK retail sales data for Apr (+1.6% M/M versus +0.5% expected). The data suggests the economy may be rebounding from the effects of adverse weather through the early spring.”
Short sterling contracts are impassive, however, with the odds of an Aug rate hike from the BoE more or less unchanged and still less than 50%.”
“Sterling gains need the support of more conviction on rates in order to extend, we feel.”
“Market sentiment is facing the additional hurdle of early Jun parliamentary vote on the EU Withdrawal Bill that was heavily challenged in the Lords recently.”
“Cable remains below the recent range base (resistance) at 1.3460/65, however, and we think this is the minimum price point the market needs to regain – and hold – in order to steady or improve more obviously.”
“The broader bear trend remains intact, however, and we rather favour fading GBP gains near-term.”