The pound fell against USD following the BOE governor Carney speech. The core inflation in the UK, currently around 1.4%, is likely to decline further in the coming months, reflecting the sterling's past strength and muted domestic cost growth. Core inflation rates in the euro area, US, and UK have declined by between three quartes and 1 percentage points since 2012. The cable grounded towards the lowest level since mid-2013. The cable made a low at 1.4851. The parallel support is seen at 1.4831 (March 2013 low) and 1.4810 (July 2013 low). In case the price close below these levels, it can extend its fall another 500 pips. The UK is slowly approaching its general election scheduled for May. Market participants expect the pound to get under downward pressure. We recommended selling with sl 1.5030 at the yesterday's session. The cable made a high at 1.5026 and fell to 1.4851. Today, we recommend fresh intraday selling only below 1.4800. Intraday resistance is seen at 1.4930. We recommend buying above 1.4930 with small targets at 1.5000 and 1.5020. Until the price close above 1.5030, use rise to sell remains in play.
The trading pattern is framed between 1.5030 and 1.4810 rounded to 1.4800.
Safe trade:
Buying above 1.4930
Selling below 1.4800
GBP/JPY
The pound sterling extending its 1-month low against the yen post Carney speech and disappointing data from the UK. Japan is expected to publish data about its industrial production today. The yen is trading lower against the pound ahead of this. The cross fell below 100Dsma and 50Dsma, but eventually managed to close above 50Dsma. The near- and short-term outlook remains bearish. On a weekly basis, the cross closes below 20Wsma and is trading below it. Parallel support is set at 180.10 rounded to 180.00. A descending trend line helped the pair to push above 50Dsma at the yesterday's session. Until the price closes below 181.65, the bearish view remains in play. We advised traders to remain calm in yesterday's session, until we get a clear picture. Hopefully, today we can get a clear picture of 180.00, 176.50 or 182.60 on the higher side. The pair is likely to choose on downside support 180.00. We forecasted a bearish head and shoulder pattern in the h4 chart, but we did not advise shorting aggressively. We concern about the pound against USD, not over the yen. In case the price closes below 180.00, the problem of the pound against yen is likely to arise. In this situation we can expect minimum 178 and 176.50.
Safe trade: Selling below 180.00
For risky traders- buying with sl 180.00
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