GBP/USD threatening a break of the 200-hour MA
This is very much the cherry on top of the softer Brexit rhetoric we’ve gotten ahead of the summit in Brussels to come. And as a result, cable is starting to move back in favour of sellers – at least in the near-term.
Should price hold a break below the 200-hour MA (blue line) it would turn near-term bias more bearish and sellers will then be eyeing a move towards the 1.3100 handle with the 100-day MA @ 1.3097 also a key level to look out for.
Despite the nudge lower, all this does is basically phase out any pricing of a December rate hike by the Gilts market – which isn’t even significant to begin with – and rules out the possibility that the BOE should be looking towards two rate hikes a year instead of one.
As for the pound, it doesn’t really change much as the release here isn’t going to impact the quid’s pricing on any rate hikes as currency traders are heavily focused on Brexit negotiations right now. This will only help give it a bit of a nudge lower but it’s not going to lead to a major decline in the pound, that will only come if Brexit sentiment deteriorates further.
But the data here is helping to provide a possibly key technical break and given that, a move towards 1.3100 cannot be ruled out in the session ahead; though I’m finding it difficult to see the pound move well below that on this data release alone.