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FOREX: GBP/USD Awaits Cues for Any Extension of Possible Reversal

FOREX
  • GBP/USD's progress off the Monday low has the pair again testing 1.2700. Further gains through 1.2724 would form the beginnings of a reversal pattern off the recent low and support at the 50-dma. With UK opinion polling still pointing to a sizeable majority for the Labour Party and the Bank of England inside the pre-election media blackout, focus will rest on the USD Index, which is consolidating yesterday's downtick, and has opening a small gap with recent highs.
  • The fade in the USD Index so far this week has provided scant relief for USD/JPY. The JPY spot trade-weighted index trades within close proximity to the pre-intervention low, keeping the strength of the currency a key concern for the Japanese authorities. For now, the technical trend in USD/JPY remains bullish, but the intraday volatility noted during the Monday session shows markets remain subject to corrective pullbacks.
  • JPY is the firmest in G10 alongside GBP so far Tuesday, with NOK the weakest. 
  • Focus for the duration of the Tuesday session rests on the Canadian CPI release, at which markets expected M/M CPI to moderate to 0.3% from 0.5% and the trimmed mean down to 2.8% from 2.9%. 
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