Mixed Pound so far – Focus turns to Labour data
|USDCAD, H1
Cable has followed EURUSD lower, earlier posting a low of 1.3981 with subsequent rebounds having capped out above 1.4000. The pound has been mixed versus other currencies, gaining versus the underperforming euro while losing ground to the yen and other units. Sub-forecast UK inflation data imparted a downward spin on the pound during the London morning session, offsetting the latest survey on BoE policy expectations from Bloomberg which found 21 of 41 economists forecasting a 25 bp hike in the repo rate at the May MPC meeting, and a total of 29 expecting a move by the August MPC. OIS markets have been discounting about 80% odds for a 25 bp hike in May, according to Bloomberg.
The pound’s rally yesterday on news of the EU and UK’s agreement on a 21-month post-Brexit transition period proved to be short lived. The development had been widely anticipated, while there remain obstacles and uncertainties. Next domestic focus will be labour data tomorrow. However since then , we have noticed Cable trying to return within the 1.4000-1.4065 range, by looking to form a Morning Star candlestick Formation in the hourly chart. Hence if this pattern is confirmed, with the last hourly candle closing above 1.4000 level and more precisely above 1.4010, then this could provide a buying opportunity for GBPUSD, with potential intra-day targets at 20-period MA 1.4025 and 1.4050 . Cable has intra-day support at 1.3965.
Meanwhile to the downside, if the pair seen going lower, below 1.3880, then it is likely to retest the 200-period MA at 1.3945 and Friday’s bottom at 1.3918 level. Intra-day but also Daily Momentum indicators present a neutral picture so far.
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