Global macro overview for 24/04/2017:
Interesting comments from external Bank of England MPC member Saunders hit the financial newswires last Friday. According to him, the post-Brexit economy in the UK will be able to grow steadily over the next 1-2 years. In Saunders' view, the target for the inflation will be raised from 2.2% to 3.0% minimum in late 2017 or early 2018. The economy could continue to log GDP growth rates around 2%, but there might be problems with customer spending growth. Nevertheless, this is likely to be offset by a stronger trend in exports and business investment. The Bank of England monetary policy will remain accommodative and there is still room for a considerable stimulus. In conclusion, the overall tone of the comments was slightly hawkish, nevertheless, the interest rate increase in May is highly unlikely mainly due to the beginning of an election campaign. Nevertheless, the possibility of more hawkish forward guidance from the BoE is still highly possible.
Let's now take a look at the GBP/USD technical picture on the H4 time frame. The technical support at the level of 1.2772 still works very well as the price has already bounced from this level three times. Nevertheless, the market is still consolidating the latest gains and no important moves have occurred yet. The next resistance is seen at the level of 1.2845, but the most important level is still the swing high at 1.2905. Please note that the trading conditions are overbought, so the rally might be limited in range.
