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Sterling back above $1.57
The pound is holding above the $1.57 level as it appears to have some momentum, in spite of dovish comments from Mark Carney yesterday. The Bank of England Chief reiterated his view that inflation could drop below 1% in the near term but move towards the BoE’s 2% target in the medium term.
The UK will release a second estimate GDP report at 9.30am (London time). The consensus is for a reading of 0.7%, and growth is clearly a factor in shaping the UK central bank’s views, but I feel even a strong figure will fail to jolt the GBP/USD out of the tight range in has been trading in. As Alastair McCaig stated, the focus is on which central bank will raise rates first; the jump in US GDP yesterday puts the Federal Reserve ahead of the BoE in my view.
The initial target for the GBP/USD is the 200-hour MA of $1.5671. The currency pair has found support around the $1.5630 region – a move below that would put $1.56 in sight. The GBP/USD pair has spent little time above $1.57 recently, so if a spate of buying were to occur the level to watch for would be $1.58.