Fundamental GBP/USD. There may not be any firecracker in BOE’s Bank Rate
The FTSE 100 is trading higher during the early hours of trading. However, the volume is thin in the market as we are not seeing any bigger trades from investors ahead of the Bank of England’s meeting. I am not expecting any surprise or any kind of firework which could color up the sky in this meeting, as the UK’s economy is already building up the steam. You may think that Mr Carney has inherited a good fortune however, he also has inherited tough challenges, as the committee has pledged to keep the interest rate at 0.5% which presents a clear problem when it comes to sustain the inflationary pressure.
Given that the committee has given its forward guidance on one hand, and hat-trick of data beats on PMI’s this week on the other hand, it seems that the unemployment threshold level set by the committee may be reached before their expectation, and if such scenario does take place, this will certainly bring the policy committee member back to the square one and it could require to rearrange their forward guidance again.
Technical Analysis – GBP/USD- A bullish pattern formed but projection not reached
The GBP/USD pair has broken out of its a symmetrical triangle to the upside on a 30 minute time frame. These patterns are considered as a bullish pattern and this could easily push the price near the yellow rectangle area shown on the chart, but this has not been the case so far, as price retraced back well before completing the projection of this triangle which is a concern for further upward move.
The pair is also trading near the 50 day (shown in green) but above 100 day (shown in yellow) moving averages which confirm that the bulls are still in control. The volatility for the pair remains low as the price is trading within the Bollinger band.
The RSI is trading in line with the price action which confirms that the bias could be still to the downside.
1.5749- 1.5717 Minor