GBP/USD: bulls taking control; eyes on the mid point of 1.42 handle
- GBP/USD: better bid and away from the 100-4hr SMA.
- Higher grounds towards the 100-W SMA on the cards?
GBP/USD has been riding the ascending support line since mid-Nov. 2017 with tendencies recently to dip below the support since Feb this year. However, recent activity and sent sterling higher while protects of the BoE are firming up and despite a dollar-friendly environment. Currently, GBP/USD is trading at 1.4134, up 0.32% on the day, having posted a daily high at 1.4166 and low at 1.4079.
Prospects for a BoE rate hike in May keeps the bears away
GBP/USD picked up a bid last Friday, recovering from Thursday's UK data miss downside in UK service PMI. However, the combination of the nonfarm payrolls disappointment and the prospects of a rate hike from the BoE next month, cable is up to meet previous resistance, 15th Feb highs, in today's US risk-on session.
"We see gilt yields rising on a combination of a wider bear market in EUR and USD bonds, the fact that BoE purchases are close to ending and heavier supply pressures," Kit Juckes, economist at Societe Generale explained, adding, "With the front end priced for a May rate rise we expect steepening further out along the curve."
GBP/USD levels
GBP/USD further consolidation expected – UOB
This rally from below the 1.41 level and the 100-4hr SMA at 1.4078, opens risk towards 1.4247 as the 200- W SMA and medium-term target. Thereafter, above the 1.4350 post-referendum high, 1.4520 equates to the 50% retracement of the decline since the 2014 high near 1.7200. To the downside, the 1.40 the figure guards 1.3960 and the four-month uptrend line at 1.3844.