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GBP/USD – Back to 1.26?
GBP/USD -- Back to 1.26?
Sterling dropped to the bottom of its month long range versus the U.S. dollar before rebounding strongly to end the day right under 1.25. This past week’s U.K. economic reports were mostly better than expected with retail sales rising strongly, wage growth accelerating and core CPI ticking up. However gains in sterling were stymied by a more cautious outlook from the Bank of England. While the central bank repeated their limited tolerance for above target CPI, they felt that inflation may accelerate less than they had forecasted in November because of recent gains in pound. They also forecast a slowdown in growth next year and combined these 2 comments gave sterling traders the green light to sell the currency. With no major U.S. or U.K. data on the calendar this coming week, GBP/USD bounced off the 50-day SMA and should continue trading between 1.24 and 1.2750. There’s some resistance at the 20-day SMA near 1.2550 but we think GBP/USD should find its way back above 1.26.