Cable has been riding the wave of reassessment over rate cut speculations following last Wednesdays stronger than expected CPI read at 2.3%. This was reinforced by signs of a recovery in manufacturing with the Flash PMI at 51.3 above the 50 neutral point. From expectations of a rate cut in June market is now pricing in the first move to come only in August providing a lift to the currency. Note however that such reassessments are in vogue with the Fed Minutes also suggesting a much later start for its own easing cycle.
Resistance
- 1.28644 – Intraday Consolidation Resistance
- 1.28237 – Intraday Consolidation Resistance
- 1.28034 – March 21 High
Support
- 1.27612 – Previous Weeks High
- 1.27330 – Previous Consolidation Resistance
- 1.26866 – Previous Weeks Consolidation Low
With a break and close above last weeks high, GBPUSD is seeing an early attempt at a follow through rally looking to test the 1.28034 high from March 21. Note we see daily stochastic reentering overbought areas in conjunction with the resistance breakout. At the 4H scale we have stochastic crawling overbought to reinforce the notion of a change in the equilibrium. For now a break of highs on the hourly scale may be seen as a bullish entry until we see Mach 21 highs at which point some position squaring may be warranted.
