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GBP/USD hovers below resistance

Cable keeps consolidating below the strong resistance area at $1.6260/6340. GBP/USD almost touched the channel resistance on Monday, rising to $1.6240, and formed quite a strong bearish engulfing candle. However, on Tuesday the pair has found support at $1.6130 and recovered to the $1.6200 mark as of writing.

Recent sharp rise in GBP/JPY has increased the bullish pressure on GBP/USD. However, the 2009-2013 trend line (currently at $1.6340) is a strong resistance for the pair. Even a break above $1.6260 (last months’ highs) will likely be limited by $1.6340. There is still a high chance for the pair to top here, but we’ll wait for a confirming break below $1.5900 to enter strategic shorts in GBP.

From the fundamental viewpoint, today the markets look forward to the BOE’s inflation report hearings at 14:00 GMT. “We expect the BoE to repeat that the unexpectedly strong growth momentum is the reason that the MPC lowered its unemployment rate projection and that there could be a case for not raising the Bank Rate immediately at the 7% unemployment threshold”, economists at Danske Bank forecast. 

Chart. Daily GBP/USD

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