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14 Feb 2014
GBP/USD has legs but may lack endurance
FXStreet (Guatemala) - GBP/USD has continued to run up to the 1.67 level and scored a high of 1.6725 and en route for May 2011’s highs.
However, much of sterling’s recent rally has been bought about by expectations of a rate hike coming sooner than what was first anticipated. Strategists at RBS explained, “The BoE's abandonment of explicit forward guidance prompted a 'hawkish' reassessment of rate expectations. However, in the coming week, we expect a unanimous set of MPC Minutes and CPI inflation remaining anchored at its 2% target to serve as a reminder that the first Bank Rate hike is some way off (we stick with our Q3 2015 forecast, with risks of an earlier move in H1 2015). In terms of the labour market data, the focus will shift towards wider gauges of slack as well as wage inflation as a leading indicator for future inflation – anaemic wage inflation should also help to temper rate hike expectations”.
GBP/USD Levels
The 20 DMA is 1.6472, the 50 DMA is 1.6431 and the 200 DMA is 1.5860. RSI (14) reads 73.89. Supports are ascending from 1.6550, 1.6572, 1.6594, 1.6623. Spot is 1.6725 while resistances are 1.6747 (2011 highs) and 1.6804.
However, much of sterling’s recent rally has been bought about by expectations of a rate hike coming sooner than what was first anticipated. Strategists at RBS explained, “The BoE's abandonment of explicit forward guidance prompted a 'hawkish' reassessment of rate expectations. However, in the coming week, we expect a unanimous set of MPC Minutes and CPI inflation remaining anchored at its 2% target to serve as a reminder that the first Bank Rate hike is some way off (we stick with our Q3 2015 forecast, with risks of an earlier move in H1 2015). In terms of the labour market data, the focus will shift towards wider gauges of slack as well as wage inflation as a leading indicator for future inflation – anaemic wage inflation should also help to temper rate hike expectations”.
GBP/USD Levels
The 20 DMA is 1.6472, the 50 DMA is 1.6431 and the 200 DMA is 1.5860. RSI (14) reads 73.89. Supports are ascending from 1.6550, 1.6572, 1.6594, 1.6623. Spot is 1.6725 while resistances are 1.6747 (2011 highs) and 1.6804.