- The GBP/USD is consolidating its gains from Tuesday but $1.4000 remains a significant cap.
- Markets are still digesting the ousting of US Secretary of State Rex Tillerson.
- The technical picture is cautiously optimistic for cable bulls.
The GBP/USD is trading around $1.3950, nearly balanced on the day and off the highs just under $1.4000. The main topic on the agenda is "Rexit" - the exit of Rex Tillerson as Secretary of State. The ex-Exxon chief executive was one of the globalists that were seen as a moderating force on Trump. The departure of Tillerson joins that of Gary Cohn, the Chief Economic Adviser that rejected the tariffs. The incoming top diplomat is current CIA Chief Mike Pompeo, a hawk that is more aligned with Trump's hard line. Fears of new duties, this time on China, weighs on the US Dollar.
The move hurt the US Dollar on Tuesday and the greenback is making some attempt to recover, but the moves are shallow. The big event in the US is the release of retail sales. A small bounce is expected in February after a disappointing report in January. See the full preview.
In the UK, Sterling still enjoys the upgrade of UK GDP forecasts for 2018. Chancellor of the Exchequer Phillip Hammond presented the upgrade and hinted that growth could even be better. However, the Office for Budget Responsibility warned that growth and trade would be impeded by Brexit.
UK Prime Minister Theresa May will address Parliament later on and is set to focus on the poisoning of the ex-Russian spy and his daughter on UK soil. However, she may also comment on Brexit negotiations. Robin Walker, the Junior Brexit Minister, said earlier in the week that progress has been made.
GBP/USD Technical Analysis - Cautiously optimistic
The move on Tuesday above the $1.3935 level was a break of downtrend resistance and a previous high. It also pushed the RSI above 50 and moved Momentum up as well.
The $1.4000 line is not only an essential psychological line, but it also capped the pair several times: March 13th, February 27th and February 25th. Further above, the February 26th high of $1.4070 is next, and it is followed by the February 16th high of $1.4160.
Looking down, $1.3935 switched positions to support. The $1.3860 is another line to watch after supporting the pair on several occasions and $1.3770, the low of March 8th, is another line to watch.
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