Cable Strength Ahead
The BoE kept rates on hold at 25 bps on 3rd August. Reasons included an expectation of sluggish growth and poor household consumption ahead. Bond repurchases were also left unchanged. Moreover, any rate increases will be at a gradual pace and limited.
Given this poor reading, it is interesting to note GDPUSD pair movement. Let’s consider it on multiple time frames and assess possible direction ahead.
Monthly
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There is a higher trough followed by a higher peak.
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Thus on a long-term basis cable is trending up.
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Although slight, the month of May did chart a lower high and lower low (green rectangle).
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This 1 month is effectively the higher trough needed for the uptrend to be defined
Weekly
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There is a clear series of rising troughs followed by risking peaks on the weekly
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This supports the monthly analysis.
4 Hour
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The red line up represents the impulse move.
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Cable has retraced 61.8% and has charted a bullish wedge (green converging lines).
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In our opinion this is the corrective move before the next impulse move begins.
Conclusion
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Cable is in an uptrend despite poor economic date.
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Forward reading? Perhaps….
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Maybe we will see unexpected news and date coming out of the UK or better than expected Brexit negotiations.
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However, this uptrend may also be on the back of market expectancy for the US economy going forward.
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However that is the subject for another time ;-)
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