The pound sterling continued its decline on Thursday with the cable dropping below 1.4145 and easily breaking through the 1.4090-support. Whether the pound’s sharp trend reversal will be sustained within the near-term remains to be seen but short traders in the GBP/USD should be rather cautious, at least for now.
Another reason for accelerated bearish momentum in the cable was an interview with Bank of England Governor Mark Carney who downplayed expectations of a rate hike at the BoE’s next meeting in May. He said that one rate hike is likely in 2018 but there are other meetings over the course of this year. However, if the BoE chooses to raise rates next month, despite recent data disappointments, sterling bulls may take over control ahead of the monetary policy decision on May 10.
GBP/USD: A crucial support is now seen at 1.4010/1.40 but with no important economic reports or fundamental events scheduled for release today it is unlikely that the pound is vulnerable to a downside break of that important barrier. A current resistance, on the other hand, is seen between 1.4150-1.4180.
The euro’s second attempt to break above 1.24 ended in failure, which is why the risk remains tilted to the downside. As mentioned in previous analysis, short traders in the EUR/USD should keep tabs on a break of the 1.23-barrier. Lower targets could be at 1.2265 and 1.2230. Euro bulls, on the other hand, should wait for an upside break above 1.2430.
We wish you good trades and a beautiful weekend.
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