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Brexit Hopes Keep GBP Buoyed Ahead of BOE

GBP
MNI (London)
  • Brexit trade deal optimism, along with general USD softening, allowed GBP/USD to stretch its recent recovery to $1.3554 into early NY business Wednesday before drifting off to $1.3461 on position adjustment ahead of FOMC.
  • GBP/USD managed to recover to $1.3494 ahead of the announcement, dropping to $1.3451 on the initial hawkish take on unchanged decision.
  • However, Fed Powell comments dampened initial outlook and pressure on the USD resumed taking GBP/USD to $1.3513 into the close.
  • Early Asia saw rate ease to $1.3496 before a strong data react in AUD and NZD applied further general pressure on the USD and took it on to $1.3565 into Europe.
  • Focus on today's BOE MPC monetary policy announcement, widely expected to keep rates/QE unchanged with market watching for mention of negative rates.
  • Bank likely to keep on hold as it watches Brexit trade developments, preferring to keep its powder dry in case of a no deal.
  • On Brexit, market to watch if Leader of the House Rees-Mogg calls for Parliament to sit Mon/Tue which could suggest a deal is close.
  • Support $1.3500/90, $1.3450, $1.3400. Resistance $1.3565, $1.3580, $1.3600.
  • MNI Techs: GBPUSD traded higher again Wednesday to extend the climb off the Dec 11 low of 1.3135. The pair has traded through resistance at 1.3539, Dec 4 high. This confirms the end of the corrective phase between Dec 4 - 11. An extension higher would set the scene for a climb towards 1.3618, May 10 high, 2018. On the downside, key support lies at 1.3135, Dec 11 low. Firm support lies at 1.3341, the 20-day EMA.
MNI London Bureau | +44 203-586-2231 | john.webb@marketnews.com
BulletMarketsForeign Exchange Bullets
MNI London Bureau | +44 203-586-2231 | john.webb@marketnews.com
BulletMarketsForeign Exchange Bullets

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