The GBP/USD pair hit an intraday low of 1.5415 in the NY session after the upbeat US CPI and weekly jobless claims hit the wires. The March 2016 Fed rate hike bets ticked up slightly to 52%, but immediately fell back to 49%. Consequently, the cable trimmed losses to finish the NY session at 1.5450 levels. Sterling ticked higher in Asia today to 1.5480, before easing off slightly to trade around 1.5466 levels.
UK calendar empty, Fed March rate hike bets at 53.2
The UK economic calendar is empty. So the focus is likely to be on the market’s appetite for the US dollars. At the moment, the latest CME Fed watch figures show the March Fed rate hike probability stands at 53.2. However, the FX markets have not responded so far to the slight uptick in the rate hike bets. Moreover, the equities in the US and Asia continued to cheer the fall in the Fed rate hike bets. Consequently, there is little reason at the moment, for the Sterling to turn lower.
Later today, profit taking on the USD shorts ahead of the weekend could lead to some amount of weakness in Cable. Meanwhile, the US industrial production and University of Michigan Confidence may receive little attention so far the actual numbers are not shockingly higher/lower than the consensus estimates.
Technicals – Downward channel intact
Sterling’s rise in Asia ran into offers at the falling trend line resistance at 1.5480 levels. Consequently, a break below 1.5448 (61.8% Exp of Jun high-July low-Aug high), could trigger a sell-off to 1.5405 (50-DMA). However, the outlook would turn bearish only in case of the daily close below 1.5387 levels. On the higher side, Sterling would need to take out offers in the range of 1.55-1.5510 so that doors are opened for 1.5552 (Feb 26 high).
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