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Sterling stands still
The pound has been trading within a tight range against the dollar overnight, and there is no clear directional bias as we begin this morning’s trading session. We are not expecting any major economic indicators to be announced from the UK today, but Mark Carney is speaking before the treasury select committee at 2.15pm (London time). The sizeable drop in UK inflation is going to be on the agenda, and Mr Carney will be forced to refrain from hawkish language, which will keep pressure on the pound.
The downward trend in GBP/USD that has been in be in place since July continues to hold, but there has been consolidation in the $1.5150-$1.5190 region recently. With the market expecting dovish commentary from Mr Carney, GBP/USD is set on its next leg lower.
Having recovered from Tuesday’s selling activity, GBP/USD has rallied during the London open, breaking through its 200-period moving average at $1.5189. This level is likely to act as downside support in search of further upside, with targets at $1.5253. However, should price action fail to sustain a move above the $1.5189 level, a re-testing of the pairs’ 100-period moving average at $1.5138 could be brought into play.