The pound has settled to near net unchanged levels on the week, after some choppy price action versus the dollar. Cable has recouped to near 1.2500 after logging a nine-day low at 1.2383 yesterday. The UK’s official retail sales report for January is up tomorrow, where a 1.0% m/m is expected after the unexpectedly sharp 1.9% m/m drop in December, though be warned as already-released January surveys of the sector by the CBI and BRC suggest downside risk. Cable expected to be prone to bouts of declines in the months ahead, with the Fed heading to further tightening and the BoE likely to remain on a neutral footing. The start of the UK’s exit negotiations with the EU — the point that the rubber will hit the tarmac — is now nearly upon us, with PM May reportedly gunning for a March-7 trigger-date of Article 50.
GBPUSD has been drifting up following yesterday’s US data and Mrs. Yellen’s testimony. On the 1 hour chart GBPUSD broke the 200-period moving average during the last 2 hours, while a breakout of the upper Bollinger bands pattern occurred during the last hour. In a higher timeframe, the 30 and 50 period moving averages have been breached and broken during the last candle. Cable support is at 1.2448-50 zone, on the 200-period moving average, since Tuesday (14th February). In the 1 hour chart, the 14 period ADX and RSI (i.e. at 68 is strong) are both positive. Furthermore, the short term MACD has crossed positively the zero-line suggesting further strength.
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