Cable ahead of BoE
|GBPUSD,H1 and Daily
Sterling is underperforming in early-week trade as market participants anticipate the BoE MPC meeting. While the BoE is widely anticipated to announce on Thursday no change in the repo rate, to leave it at 0.5%, and leave QE totals unchanged, the statement and minutes will be of particular interest following a run of overall disappointing data so far available from April and May. The BoE’s guidance expected to reflect this, and expectations for a 25 bp rate hike as soon as August will likely be reduced to a more tentative call.
Cable has been ebbing lower at S1 since the London open today, logging a low so far of 1.3226. Friday’s low is at 1.3211, while the seven-month high, seen on May 29, is at 1.3204. Therefore it seems that immediate support at 1.3205 has remained untouched for now. If this remains the case, along with a return back above PP level at 1.3263, could suggest further positive intra-day momentum, with next Resistance levels at 1.3315 and at 20-DAY MA at 1.3350. However, the Momentum indicators in the hourly chart remain on the downside scenario, as RSI remains below 50 despite the rise seen in the morning and MACD oscillator continues sloping with negative bias.
In the wider picture the price action of GBPUSD, suggests that pair remains in a strong downtrend, without signs of reversal yet. Technical- wise, Cable remains in a trend-following mode, as it is traded at 7-month lows. The Daily momentum indicators are slipping lower, while 50-DAY EMA crossed below 200-DAY EMA, suggesting that the sell off is likely to continue. The Daily RSI slopes below 50 and MACD oscillator increases within the negative area and below its signal line, adding further confirmation for the continuation of the downtrend. Meanwhile, Volume indicator presents high Volume values, without any signs of decreasing volumes on this sharp decline since April.
Next long-term support stands on 20-Months MA, at 1.3160. A break below this level should imply to a major losses for the pair since below this level the next real support levels are 1.3000 and 1.2770. Resistance area is within recent highs and 23.6 Fibonacci retracement levels, at 1.3450-1.3470 area.
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