GBP/USD: lined up better bid ahead of the FOMC, where next?

GBP/USD resting up ahead of the FOMC result at the top of the hour.
GBP/USD: bullish bias on a fundamental and technical basis, where next?

Ross J Burland FXStreet

GBP/USD has moved into a consolidation phase as we await the turn out of the FOMC as to how dovish or hawkish the members will have been over this two day's of meeting and deciding upon the interest rate. Currently, GBP/USD is trading at 1.4064, up 0.48% on the day, having posted a daily high at 1.4080 and low at 1.3996.

Fed Preview: Dollar-friendly dot-plot before a Powell punishment?

Indeed, sterling has been a strong performer of late, despite the miss in CPI expectations yesterday where UK CPI slipped to 2.7% in Feb (from 3.0% in Jan and against market expectations for a drop to 2.8%. PPI input and factory gate prices were also below forecasts for the month), denting the pound's advance.

However, the pound didn't stay down for long, underpinned by movement in Brexit negotiations this week and finding additional support from today’s UK wage data showing a 2.8% gain in average earnings to 2.8% (highest since late 2015) and a nudge lower in the ILO unemployment rate.

BoE on the cards this week

Thursday’s retail sales report will also be in view this week as will the BoE, both on Thursday. The backdrop of the wages data supports the idea of the BoE tightening rates modestly in the next few months (note 19bps of tightening factored in for May).

GBP/USD levels

Sustaining the break out from the 2018 consolidation (bull wedge pattern), GBP/USD has been up to 1.4085 where a push higher through the 1.41 handle opens up 1.4250/1.4350 levels - (200-W SMA is located at 1.4288). On a dip, the descending resistance comes as a support within the reversal from Feb 28th 1.3711 recent lows. A deeper support below the trend line comes in at 1.3890/10, (21-D SMA) and lower, 1.3840. The Feb 9th low is at 1.3765 and that guards the 1.3658 September peak and the 1.3479 2016-2018.

Author

Ross J Burland

FXStreet

Ross J Burland, born in England, UK, is a sportsman at heart. He played Rugby and Judo for his county, Kent and the South East of England Rugby team.

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