GBP/USD: trapped between rate hikes and Brexit woes
|GBP/USD Current price: 1.3858
- GBP/USD neutral short-term needs to regain 1.3920 to look constructive.
- Chances of a BOE rate hike offset by Brexit jitters.
The GBP/USD pair trades uneventfully within Tuesday's range, marginally lower ahead of Wall Street's opening as the dollar recovers from late Tuesday/early Wednesday's slump. Investors have been on their toes ever since the US January Nonfarm Payroll report showed a large jump in wages' growth, a sign of increasing inflationary pressures in the country. Fears that inflation will finally pick up, and strongly, triggered will rides all through financial markets, with Wall Street losing over 10% from its record highs, and swings of over 20 basis points in Treasury yields. At the same time, UK inflation remained too high in January, and given the BOE's latest statement, chances of a rate hike in May in the UK have increased. Brexit woes, however, undermined the Pound.
The pair is stable around 1.3860 ahead of US inflation data release, which in spite of not being Fed's favorite measure, could anyway fuel fears, or brought relief. Any case seems action is granted for today. Technically, the 4 hours chart presents a neutral stance ahead of the event, as the price is a few pips above its 20 SMA and 200 EMA, both converging at 1.3850, while technical indicators lack directional strength, stuck around their mid-lines. The pair would need to settle above 1.3920 to be able to gain further bullish traction, although limited by the 1.4000 threshold.
Support levels: 1.3845 1.3800 1.3760
Resistance levels: 1.3885 1.3920 1.3950
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.