GBP/USD: more weakness ahead
By Kira Iukhtenko
Political factors keep on dragging the British pound lower. In line with our expectations, GBP/USD tested the 1.4050 support level and rebounded later in the week. The upside remains capped by the trend resistance live at 1.4140. It confirms the bearish dominance on the market. Break below 1.4050 would open the way for a more rapid depreciation of the UK currency with a weekly target of 1.3840 (February low).
On Tuesday, watch the UK March inflation figures. CPI rose by 0.3% both in January and in February. We’ll see whether the March commodity rebound is reflected in the price dynamics. The Bank of England meeting will take place later in the week, on Thursday. According to the most recent Reuters pool, the central bank is not expected to lift rates from the current 0.5% level until early 2017.