The rally in GBP/USD stays unabated so far on Friday, now quickly leaving behind the 1.3500 handle and recording fresh cycle tops near 1.3560.
GBP/USD (further) up on USD-weakness
The continuation of the selling mood around the greenback is allowing Cable, and the rest of the risk-associated assets, to trade in the upper end of the range and well above 1.3500 the figure, levels last traded post-Brexit vote in late June 2016.
GBP is seeing its upside intensified as of late after the Bank of England delivered a hawkish statement at yesterday’s meeting, arguing that it could be appropriate to remove some monetary stimulus in the upcoming months. In the same line, expectations of a rate hike by the ‘Old Lady’ seems to have been brought forward, with some analysts now seeing the central bank raising rates in November and Q2 2018.
In this regard, strategists at TD Securities noted “We expect the Bank of England to hike Bank Rate 25bps in November, and again by May 2018, most likely at its February meeting. Beyond this, policy again reverts to “wait and see” mode as the MPC assesses the effects of Brexit uncertainty on the economy”.
GBP/USD levels to consider
As of writing the pair is up 1.25% at 1.3567 and a break above 1.4010 (low Jun.16 2016) would aim for 1.4770 (high May 3 2016) and finally 1.5020 (high post-Brexit Jun.24 2016). On the flip side, the immediate support lines up at 1.3193 (10-day sma) seconded by 1.3167 (low Sep.14) and then 1.3032 (21-day sma).
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