GBPUSD: Prefer to buy dips

GBP/USD: 1.2392

Cable remained bid on Friday following on from the BOE Meeting of the previous day. MPC member, Kristen Forbes hawkish outlook has assisted Sterling’s run higher and with the Minutes showing that other MPC members are looking at hikes as well because of the weakness in Cable, possibly boosting inflation, we may see further strength ahead although we are shortly going to begin to run into stiff resistance.

Although the hourly momentum indicators are showing some minor bearish divergence, the 4 hour/daily momentum indicators hint that further medium term gains look possible, although 1.2405 will again provide stiff resistance. Above here though would then allow a run towards 1.2440/60 and possibly on towards 1.2485 where the next, major descending trend resistance lies. If seen, this should be tough to break at the first attempt. On the downside, minor support will be seen at 1.2350 ahead of Friday’s low at 1.2323, and then at around 1.2290. For now, buying dips seems to be the plan, with a SL placed under 1.2290, but looking for a run towards 1.2485. A move through that point then opens the way to 1.2583, the 6 week high, or even towards 1.2707, last month’s peak although it is too early to think of that.

With Article 50 likely to be triggered in the next few days by the UK Government, a fairly cautious stance may be required if trading Sterling.

Economic data highlights will include:

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W: CPI, PPI, RPI, PSNBR

T: UK Retail Sales

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