A Sterling move which at the moment seems to be perfectly lateral and which can last until Thursday, when the BoE will take the decision about its interest rate and the Inflation data will be revealed.
These are the 2 events the investors are looking at, while traders still continue to search for an entry point for their shorts on the Sterling. In this general waiting context the two pairs GBP/USD and EUR/GBP are making a flat movement on the chart, trading respectively at 1,4408 and 0,7901 and collecting a perfectly neutral performance.
The market sentiment continues not to favor a strong direction to the crosses and the lack of significant fundamentals is not encouraging a possible price action.
Despite the market have already excluded an interest rate increase (at least until the end of 2016) and the Thursday’s BoE decision seem to be clear, the general uncertainty and concern climate related to the Brexit referendum are bringing the meeting to a different level and unexpected surprises are not excluded. In addition the expectation for the Q1 GDP growth confirm a slowdown of the English economy, despite the service sector remains the best performer. It will be very interesting to se wether the Central Bank will include in his statement any change in his expectations and any rumors for the post-vote, even if the investors are convinced that the tone will be extremely neutral.
Today’s data regarding the trade balance could have a little effect on the Sterling even if i don’t expect any strong move, while the Dudely’s speech in Zurich could affect the USD and consequently the Cable.
Looking at the pairs from a technical point of view the immediate resistance for the GBP/USD pair is positioned at 1,4500 over which we could find the 1,4538 one. On the flip side the first significant support is seen at 1,4356 (100 DMA).
Regarding the EUR/GBP on the other hand, the 4th May high at 0,7947 could be the first resistance, while at the downside the 20 days SMA at 0,7860 could favor a possible rebound.