GBP/USD Forecast: BoE’s Saunders set to support Sterling with his hawkish rate view
|- The Bank of England Governor comments saw Sterling bulls turning to tame oxen with GBP/USD falling 320 pips off its 22-month high this week.
- Carney sounded dovish, but what else can he do three weeks ahead of May meeting?
- The Bank of England hawkish member Michael Saunders is now scheduled to same the day for Sterling.
Sterling is trading down 0.3% at around 1.4050 against the US Dollar ahead of the hawkish Monetary Policy Committee (MPC) of the Bank of England member Michael Saunders speech in Scotland. Sauders is a hawkish MPC member voting in tandem with Ian McCafferty in favor of the rate hike in March and voted in favor of the rate hike well ahead of last November rate hike that lifted the Bank rate from an all-time low of 0.25% by 25 basis points.
GBP/USD has been hammered lower by the trinity of important UK macroeconomic indicators scheduled for this week that all came in below expectations and even more importantly by the Bank of England Governor Mark Carney's comments on Brexit uncertainty possibly delaying the rate hike this year. The GBP/USD is now trading some 320 pips off the 22-month high the currency pair recorded this Monday.
As Carney’s comments saw Sterling bulls turning tame oxen, the actual message from the Bank of England top official could not be foggier. All that Carney said is that the Bank of England still sees one rate hike this year while pointing out that the combination of softer macro data and Brexit uncertainty that possibly related to major defeat of the UK Prime Minister’s Brexit policy in the House of Lords are on the table and that there are also other meetings at which the Bank could raise the Bank rate. Most likely meaning August and November when the MPC meets to release its quarterly Inflation Report macroeconomic forecast.
Technically, the market sold off the bullish upward rising trend and having the hawkish MPC member speaking later on Friday, GBP/USD might find a solid support as it trades in mid 1.4000s. Technical oscillators like Momentum is pointing downwards to the level unseen since February 9 this year. The Relative Strength Index (RSI) and Slow Stochastic though made a bullish crossover in the oversold territory indicating upward correction potential targeting 1.41000 first before moving to mid 1.4100s.
GBPUSD 15 minutes chart
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