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GBP/USD – Back to 1.5200?
Cable counter trend rally may have already run out of steam. Today’s sharp decline in US session after blah inflation numbers overnight indicates that the market believes BoE will be far behind the Fed in normalizing monetary policy. Despite the fact that most of the MPC members have hewed a hawkish path threatening to hike rates sooner rather than later, the latest UK economic data continues to show weakness rather than strength.
Tonight’s UK labor numbers and tomorrow Retail Sales could be pivotal in setting the tone for the unit this week. If the numbers disappoint the market may sell sterling all the way to 1.5200 level to test that recent double bottom as traders become even more convinced that the BoE will be a distant second in any type of normalization process. Meanwhile 1.5500 continues to contain any upside moves.