BRITISH POUND RECOVERING AFTER CARNEY’S COMMENTS, AWAITING LOCAL DATA
Sterling found shelter yesterday against the greenback as Carney on behalf of BOE, held the press conference yesterday with reassuring words coming out of his mouth directly to the press. Mr. Carney’s comments regarding UK financial system suggest that the performance of the system indicates that UK passed several tests and obstacles this year. Also, recent global assets prices reacted strong following US election and UK financial system stood well.
Bank funding costs remain significantly lower than during episodes of severe stress and credit conditions have not tightened. The drop in sterling since Brexit, suggests markets expect modest real income growth, less open trade and consumers drawing down savings and borrowing for first time since crisis, reinforcing indebtedness.
GBP/USD nourished in early trading sessions after BOE statement yesterday, made a rally from 1.2502 low, clocked a high at 1.2541 at which the pair is trading right now. GBP/USD also took advantage of weaker US dollar index dropping to 101.34 low after peeking yesterday to 101.88. The pair has passed 100 SMA 1.2463, not long before passing 50 SMA at 1.2441 which give some indication that GBP/USD is on a slow ladder, but as Carney hinted, the pair is recovering slowly.
UK awaits today local manufacturing PMI scheduled to be released at 9:30 AM GMT which could give an additional boost to the pair at which traders has their eyes set at third resistance located at 200 SMA 1.2637. At this level, GBP/USD can be considered on the right path of shifting courses being overall bearish – pressured by strong US economy- to bullish trend.
Trend: Bullish Sideways
Key levels to watch: Weekly Pp 1.2433
Resistance levels: R1 1.2544, R2 1.2586 , R3 1.2637
Support levels: S1 1.2493, S2 1.2449, S3 1.2397
Remark: Although GBP/USD is bullish sideways, a bearish short-term-downswing should be taken into consideration due to crucial news today on UK and US economy. Price range between S1 and R1, but look forward for more volatility as UK releases manufacturing PMI today, later on US PMI scheduled at 3:00 PM GMT which will settle the rift between GBP/USD.
Note: This analysis is intended to provide general information and does not constitute the provision of INVESTMENT ADVICE. Investors should, before acting on this information, consider the appropriateness of this information having regard to their personal objectives, financial situation or needs. We recommend investors obtain investment advice specific to their situation before making any financial investment decision.