Has The Bank Of England Marked The Top For Sterling?
Axi | May 12, 2017 12:52
Originally published by AxiTrader
Could sterling be headed back down toward the mid 1.26 region?
That's the question I'm asking myself after GBP/USD came under pressure in the wake fo the Bank of England's decision overnight to leave rates on hold in a 7-1 decision.
That the pound weakened even though the BoE was more sanguine on the impact of Brexit on growth, and highlighted that rates would probably need to rise sooner and faster than the yield curve implied was to me a hawkish tilt.
But GBP/USD weakened against both the US dollar and the euro.
Looking at the GBP/USD daily chart there are signs that it has peaked for now and could be heading back to a garden variety 38.2% retracement of the March-May move which comes in at 1.2650/55.
My system is already short but confirmation that a deeper move lower is likely if GBP/USD falls below last nights low of 1.2848. While above that there is a chance for another test of what is looking like formidable resistance in the 1.2980/1.3000 region.
Support is 1.2730 on the run lower should it occur. But overall sterling is looking like it's biased lower.
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