GBP/USD awaits clear signals
Kira Iukhtenko, FBS
GBP/USD dipped to $1.6810 (May 23 low) as the UK BBA mortgage approvals fell more than expected in April. The pair is cramped in the $1.6880/10 range intraday.
There are no clear trading signals at the moment. The cable is forming a bearish daily candle with a long upper shadow, but the $1.6800/10 area offers immediate support to the market. A daily close below $1.6800 could open the way to $1.6730 (May 15 low). Technical indicators on the H4 chart look bearish: the 55-period MA crossed the 100- and 200-period MAs to the downside, MACD histogram, turned negative.
On the bullish side, resistance lies at $1.6880, $1.6920 and $1.7000. We concede another chance to touch the $1.7000 mark in the coming days as long as we hold above $1.6800. The release of the revised Q1 GDP on Thursday may become a strong bullish event for the pair – forecasts are USD-negative. What’s more the market still remembers the last week’s BoE meeting minutes (less dovish than expected) and the strong retail sales.
The BoE Governor Marc Carney is due to deliver a speech today at 21:00 GMT in London – the market will watch his rhetoric concerning monetary policy. For now we stay out of the market and wait for a breakout in one or another direction.
Chart. H4 GBP/USD