Cable testing near term resistance

The sterling has had a good run in recent times and continues to hold its ground on the back of some encouraging data.

Bank of England
Source: Bloomberg

Last week we saw the BoE upgrade its inflation outlook along with some fairly hawkish comments by Governor Mark Carney. This week, we’ve had roughly in line CPI numbers while jobs numbers were actually ahead of consensus. As a result, the pound has actually managed to maintain its gains against the greenback which had made a recovery against most of the majors. GBP/USD managed to form a base in the 1.5000 region after experiencing a relentless selloff from July last year when it was trading at around $1.7200. From the January lows, cable has managed to form a short term uptrend which is currently being tested. Additionally, there is a 23.6% retracement of the drop from July last year to January which comes in at 1.5481. This level has been tested this week and continues to hold for now. Unless we see GBP/USD close below the uptrend, then the bulls can consider buying the pair on a break above $1.5481. On the calendar today, we have UK retail sales and public sector net borrowing. Apart from that, it’ll be all about Greece dictating risk sentiment.   

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