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Having breached 1.42 in early Asia yesterday, the GBP/USD pair extended the drop to 1.4090 before recovering a major part of its losses to end the day around 1.4151 levels.
Cable felt the heat of latest Brexit polls which showed a tie between ‘stay’ vote and ‘exit’ vote. Slower rebound in US CPI and dovish comments from Fed officials did help recover in the pair, but failed to ensure a convincing break above hourly 200-MA level. This may be due to initial jobless claims hitting lowest since 1973.
Bank of England policy committee voted 9-0 to keep rates unchanged, while statement/minutes warned about sterling sell-off in case of Brexit. Devoid of major hawkish/dovish surprises, the event was a dud and hardly had any impact on Sterling. The pair currently trades around 1.4150 levels. The data docket in the UK is empty, while across the pond US industrial production figure is due for release.
Technicals – Watch out for a failure at hourly 200-MA
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GBP’s repeated failure to cut through hourly 200-MA (seen today at 1.4166) despite dovish comments from Fed officials and slower rise in CPI makes it a strong resistance, which needs to be taken out, for it would signal intraday bearish invalidation and open doors for 1.42-1.4206 (hourly 100-MA)
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That would also mark a bullish move by hourly RSI above 50.00 and open doors for 1.4252 (50% of 1.4669-1.3835).
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On the contrary, failure to take out hourly 200-MA at 1.4166 followed by a break below 1.4133 would shift risk in favor of a drop to 1.4079 (Jan 21 low) beyond which the bird may test bids around 1.4032 levels.
EUR/USD Analysis: Rebound from 1.1230 could be bullish
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Euro’s rebound from confluence of key technical levels in the range of 1.1230-1.1241 (Rising trend line support + 38.2% of 1.0463-1.1714 + 23.6% of 1.0517-1.1465) would also mark RSI’s reversal from 50.00 levels and thus open doors for a re-test of 1.13 – 1.1320 (trend line hurdle).
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A daily close above 1.1320 would shift risk in favor of a break above 1.1340 next week and a rise to 1.1376-1.14 levels.
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Conversely, daily closing below 1.1230 would indicate a short-term top is in place at 1.1465 and the spot could not move towards 1.11 handle. Moreover, a daily close below 1.1230 would also mark a bearish break in daily RSI below 50.00 levels.
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