GBP/USD fails again above 1.3100, ends week again around 1.3060
|- Monetary policy expectations weighed on GBP.
- GBP/USD keeps moving without a clear direction in the short-term.
The GBP/USD fell on Friday for the fourth day in a row, even despite weaker than expected US data and the slide of the DXY. The pound remains weak amid policy expectations from the Bank of England.
“Comments from Bank of England governor Mark Carney and Silvana Tenreyro suggest that the central bank may have ended their Brexit moratorium and be edging towards a rate cut. If so, this would probably take place at the 7 May meeting”, explained ING analysts. They see jobs data as critical for the central bank. Next week data does not include jobs but inflation (Tuesday) and retail sales (Friday).
Brexit developments offered no surprise at the UK Parliament, having no relevant impact on the pound. According to ING analysts, the Brexit withdrawal agreement is not playing a decisive role in pricing right now. “Instead, news that the BoE is turning a little more dovish, plus no signs of a serious US slow-down, suggests GBP/USD may be spending more time at the lower end of its 1.29-1.35 trading range”.
Technical outlook
The pair shows no clear bias in the weekly chart, closing near 1.3065 for the third week in a row. “It is trading within a narrowing triangle or wedge. Uptrend support is more moderate and began in November. Downtrend resistance is steeper and kicked off at the peak of 1.3510 around the elections. Overall, support is stronger”, explained Yohay Elam, analyst at FXStreet.
According to Elam, the picture is modestly bullish considering GBP/USD is trading above the 50, 100, and 200-day Simple Moving Averages. “Critical support awaits at 1.3010, which capped cable in October and also in January. It is followed by 1.2920, which was a swing low around Christmas.”
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