The GBPUSD is testing – well now breaking above – a key target area defined by the 100-hour moving average at 1.2756 and the 38.2% retracement of the move down from the July 27 high at 1.27628. A swing area between 1.2738 and 1.2759 (see red number circles) is also being tested now broken 1.27717. Traders looking for more upside will now use the 100-hour moving average 1.2756 as a close risk level. Stay above is more bullish at least in the short term. There is more work to do however to increase the bullish bias.
On the topside, the next major target comes against the 50% midpoint of the move down from the July 27 high at 1.2807. Above that is the 200-hour moving average of 1.2815.
Yesterday the Bank of England raised rates by 25 basis points. In BOE’s Governor Bailey’s press conference, he said:
- Anticipates inflation to drop to approximately 7% in July and further decrease to around 5% by October.
- BOE will evaluate the most fitting path for rates based on evidence, and balance risks accordingly.
- Concerning the labor market, Bailey emphasized that the status of the labor market and wage rates significantly affect the economy.
- Regarding economic growth and resilience, Bailey noted that projections for economic activity have weakened since May, with some unexpected downturns in June but also signs of recovery.
The focus today is on weakening the US dollar. 10 year yields are down 3.8 basis points. Two-year yields are down -4.4 basis points. Stocks are higher in premarket trading.
PS. The EURUSD is breaking above its 200-hour moving average at 1.10037. The 50% midpoint of the move down from last week’s high comes in at 1.1030. The high from last Friday and Monday came in near 1.1045. Those are the next targets. Close risk is now the 200 hour moving average.
This article was written by Greg Michalowski at www.forexlive.com. Source