GBP/USD Close Above 1.5000 to Generate Larger Rebound on Hawkish BoE
22 Apr 2015 16:15, GMTTalking Points:
- GBP/USD Climbs to Fresh Monthly High on Hawkish Bank of England (BoE) Minutes.
- AUD/USD Holds April High (0.7841) Despite Stronger-Than-Expected Australia Core CPI.
- USDOLLAR Remains at Risk as Fed Liftoff Remains ‘Uncertain.’
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Chart - Created Using FXCM Marketscope 2.0
- GBP/USD marks fresh monthly high (1.5078) as Bank of England (BoE) warns of faster inflation on the back of the depreciation in the exchange rate & warns interest rate expectations are ‘exceptionally flat.’
- Despite the unanimous vote, BoE may show a greater willingness to normalize monetary policy following the May 7 election amid the uncertainty surrounding the fiscal outlook; close above 1.5000-15 (50% expansion) raises the risk for a larger correction in GBP/USD.
- Seeing increased volatility in the DailyFX Speculative Sentiment Index (SSI) following the BoE Minutes as retail crowd flips net-short GBP/USD, with ratio currently holding at -1.13.
AUD/USD
- Lack of momentum to test the April high (0.7841) following the stronger-than-expected print for Australia’s core Consumer Price Index (CPI) may generate range-bound prices in AUD/USD.
- Need a close above 0.7820 (38.2% retracement) to 0.7860 (61.8% expansion) to favor a further advance in the aussie, but the pair may continue to consolidate ahead of the Reserve Bank of Australia’s (RBA) May 5 policy meeting amid speculation for a rate cut.
- Close below 0.7570 (50% expansion) to 0.7590 (100% expansion) along with a break of the bullish RSI momentum to favor a resumption of the long-term bearish trend.
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GBPCAD Testing Slope Resistance- Long Scalps at Risk Sub 1.84
USDOLLAR(Ticker: USDollar):
| Index | Last | High | Low | Daily Change (%) | Daily Range (% of ATR) |
|---|---|---|---|---|---|
| DJ-FXCM Dollar Index | 11996.59 | 12024.88 | 11958.09 | -0.17 | 95.42% |
Chart - Created Using FXCM Marketscope 2.0
- Dow Jones-FXCM U.S. Dollar may continue to face range bound prices ahead of the U.S. Durable Goods report amid the ongoing closes above 11,951 (38.2% expansion) to 11,952 (50-Day SMA).
- Despite the better-than-expected housing data prints from earlier this morning, the minor improvements may not be enough to generate a majority vote for a Fed rate hike in June.
- Downside risk remains as the RSI retains the bearish momentum, with key support standing around 11,869 (23.6% expansion) to 11,901 (78.6% expansion).
| Release | GMT | Expected | Actual |
|---|---|---|---|
| MBA Mortgage Applications (APR 17) | 11:00 | -- | 2.3% |
| FHFA House Price Index (MoM) (FEB) | 13:00 | 0.5% | 0.7% |
| Existing Home Sales (MAR) | 14:00 | 5.03M | 5.19M |
| Existing Home Sales (MoM) (MAR) | 14:00 | 3.1% | 6.1% |
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--- Written by David Song, Currency Analyst
To contact David, e-mail dsong@dailyfx.com. Follow me on Twitter at @DavidJSong.
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