The GBP/USD has edged higher today as the Bank of England has maintained the interest rate on hold, the pair has increased aggressively and has reached fresh new highs, the price is strongly bullish on the short term, could jump much higher till the end of the week. The rate has managed to jump much above the yesterday’s high, the Pound could increase further versus the greenback as the US dollar index remains under selling pressure on the short term, the index has reached a very strong resistance level and now has started a short corrective phase, if the USDX will drop below the 95.99 level, then will force the USD to drop much deeper versus all its counterparts.
The Cable has increased significantly because the BOE has maintained the Official Bank Rate steady at 0.50%, even if the traders have expected to see a decrease by 0.25%, the MPC members have voted by a majority of 8 to 1 to leave the rate on hold, this decision has come somehow surprisingly after the, moreover the Asset Purchase Facility has remained steady at 375B, the MPC members have voted unanimously for this decision, the Cable has received a serious boost from the BOE.
The GBP/USD has retreated a little after the United States economic data was released, the Unemployment Claims have remained on hold at 254K in the previous week, the economic indicator has come better compared to the 263K forecast, wile he Producer Price Index has increased by 0.5%, exceeding the 0.3% forecast, has surged more compared to the 0.4% growth in the previous reading period. Moreover the Core PPI has increased by 0.4%, more than the 0.1% estimate, the USD has posted humble gains after the United Sates economic data were sent to the public.

You can see that the rate has found strong demand right above the lower median line of the medium term descending pitchfork and now is fighting hard to rebound and to recover after the massive drop registered after the Brexit referendum, the price is approaching the median line (ML) of the descending pitchfork, where is expected to find very strong resistance, however the pair could find resistance right now if will fail to approach again the today’s high. I want to remind you that the GBP/USD remains under selling pressure on the medium term, the price could resume the downward movement after the short correction will end, this corrective phase was expected after the sharp drop.

I’ve said that the price could find resistance right now because has failed to stay above the sliding parallel line, the pair could increase further only if will retest the minor median line (ml) of the ascending pitchfork and this dynamic support will hold. The perspective remains bullish as long as the price is trading above the minor median line (ml), but I’m afraid that will drop again below this obstacle and will attract more sellers again, which will lead the rate lower in the coming days.

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Olimpiu Tuns

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