With the U.K. inflation reports and a speech by a dovish BOE member lined up, I’m looking at this quick opportunity to short the pound.
Fresh Market Headlines & Economic Data:
Upcoming Potential Catalysts on the Forex Calendar:
- BOE MPC member Michael Saunders’ testimony at 9:45 am GMT
- U.K. headline and core CPI at 10:30 am GMT
- Euro zone industrial production and trade balance at 11:00 am GMT
What to Watch: GBP/USD
Cable is trending lower inside a descending channel on its 1-hour time frame, and price is currently testing resistance. This happens to line up with the 50% Fib level, and stochastic is suggesting that sellers could return soon.
The upcoming CPI releases could determine whether or a bounce or a break off these levels might follow, with analysts expecting no change in the headline and core figures.
Prior to this, though, MPC member Saunders will be speaking and probably dishing out some dovish vibes. Recall that he was one of the dissenters who voted to cut rates in the previous policy decision and it’s likely that he could reiterate his call for more easing.
Simple moving averages are reflecting a bearish trend for the pair, but the EMAs are still on neutral grounds.
The pair’s usual daily volatility suggests that today could see below-average pip movement, so a tight stop just past the channel top and 61.8% Fib could be enough to weather any spikes.