GBP/USD: Bullish setup, all eyes on BOE rate vote split
|- Cable clocked 7-week high in Asia.
- Focus on UK retail sales, BOE vote split.
- Technical charts are biased bullish.
The GBP/USD pair clocked a seven-week high of 1.4170 in Asia on account of the broad-based USD selling.
Eyes BOE rate vote split
The Bank of England (BOE) will likely keep interest rates unchanged at 0.5 percent, however, the hawks at the central bank may feel emboldened to vote for a rate hike on the back of the brexit transition deal and the strong UK labor and wage growth numbers.
The odds of a hawkish vote split may rise further if the UK retail sales number, scheduled for release ahead of the Fed, shows a big jump in consumer spending.
The GBP may attack 1.4278 (February high) if two to four BOE monetary policy committee (MPC) members vote for a rate rise Thursday. In such a scenario, the odds of a BOE rate hike in May would rise considerably.
GBP/USD daily chart shows a bull flag breakout
- Bull flag breakout confirmed on March 19 has opened doors for a rally to 1.4346 (Jan. 25 high).
- 5-day moving average (MA), 10-day MA trend north - indicate bullish setup.
- The relative strength index (RSI) is in bullish territory and trending higher.
- The MACD shows the GBP/USD is enjoying a strong bullish momentum.
Key levels
A convincing move above 1.4196 (76.4% Fib R of Feb high - Mar low) would open up upside towards 1.4278 (February high) and 1.4346 (Jan. 25 high). On the downside, breach of support at 1.4145 (Feb. 16 high) would allow a deeper pullback to 1.4052 (ascending 5-day MA) and 1.40 (major psychological support).
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