Ross Woodfield
Blackwell Global Investments Limited
The Pound had a rough ride last night and it briefly touched the support at the recent one year low. With little to get excited about in the UK, we could see a push through the support to fresh 15 month lows.
Earlier this week we saw UK inflation fall from 1.3% to 1.0%. This was a disappointment to the market, but not a real shock as inflation has been falling steadily throughout the year. This could eventually be reflected in the voting of the Monetary Policy Committee members. The latest voting put 7 at neutral and 2 in favour of a rate rise (no change from a month ago). Certainly the BoE will not consider raising interest rates when inflation is at its lowest in over 10 years.
UK 5 year Inflation
Yesterday saw the unemployment rate remain at 6.0% versus an expected fall to 5.9%. Again a disappointment for the market and the Fed coming across a little more hawkish than usual helped to push the pound down over 200 pips against the dollar. The differential in the two economies is likely to drive further lows in this pair.
It now sits just above the low at 1.5541 and will likely give it another test, especially with UK retail sales later on today. Core retail sales have been a mixed bag recently and the market expects a drop this month from 0.8% to 0.4%.
If the results come in worse than expected we could see a breakout lower of the support. If this happens, look for the price to target 1.5485 and 1.5425 as support levels. Traders could look to take advantage of the momentum of a breakout with a stop entry under the current support.
If we see a resumption of the ranging patter, look for 1.5623, 1.5764 and the bearish trend to act as resistance. A rejection off the trend line could provide a short for traders to take.
The UK economy is not looking as rosy as it once did and the US is picking up pace, driving the GBPUSD pair lower. A breakout of the current range lower could provide traders an opportunity for a short on the pair.
Forex and CFDs are leveraged financial instruments. Trading on such leveraged products carries a high level of risk and may not be suitable for all investors. Please ensure that you read and fully understand the Risk Disclosure Policy before entering any transaction with Blackwell Global Investments Limited.
Recommended Content
Editors’ Picks
EUR/USD holds above 1.0700 ahead of key US data
EUR/USD trades in a tight range above 1.0700 in the early European session on Friday. The US Dollar struggles to gather strength ahead of key PCE Price Index data, the Fed's preferred gauge of inflation, and helps the pair hold its ground.
USD/JPY stays above 156.00 after BoJ Governor Ueda's comments
USD/JPY holds above 156.00 after surging above this level with the initial reaction to the Bank of Japan's decision to leave the policy settings unchanged. BoJ Governor said weak Yen was not impacting prices but added that they will watch FX developments closely.
Gold price oscillates in a range as the focus remains glued to the US PCE Price Index
Gold price struggles to attract any meaningful buyers amid the emergence of fresh USD buying. Bets that the Fed will keep rates higher for longer amid sticky inflation help revive the USD demand.
Sei Price Prediction: SEI is in the zone of interest after a 10% leap
Sei price has been in recovery mode for almost ten days now, following a fall of almost 65% beginning in mid-March. While the SEI bulls continue to show strength, the uptrend could prove premature as massive bearish sentiment hovers above the altcoin’s price.
US core PCE inflation set to signal firm price pressures as markets delay Federal Reserve rate cut bets
The core PCE Price Index, which excludes volatile food and energy prices, is seen as the more influential measure of inflation in terms of Fed positioning. The index is forecast to rise 0.3% on a monthly basis in March, matching February’s increase.