Longs On GBPUSD Encouraged As Pound Reverses Sharply From 6-week Low
At its meeting ending on June 15, the Bank of England’s Monetary Policy Committee (MPC) voted unanimously to keep the UK bank rate unchanged at 0.5%. The stock of purchased assets, which is financed by the issuance of central bank reserves, was at £375 billion. The monetary policy report pointed out that CPI inflation, came in at 0.3% in May, on a year on year basis. This was far below the target of 2%. The main reason for this sluggish economic performance was the large draw down from energy and food prices.
The Office for National Statistics on Thursday reported that turnover at UK retailers increased 0.9% in May compared with the previous month. This was higher than the expected reading of 0.3%, but lower than a 1.9% advance in April.
On June 16, Jo Cox, a member of Parliament supporting Britain’s continued membership of the European Union, died after being shot and stabbed. After this development, campaigns’ have been suspended by both the Remain and Leave camps. The sterling edged up strongly on beliefs that this murder may fuel the “frozen engine” of the “Remain” group in a sympathy wave.
Meanwhile, according to data released earlier today by the Commerce Department, U.S building permits rose by 0.7% in May to an annualized rate of 1.14 million. This is an optimistic reading against the backdrop of a sluggish labor market that keeps weighing on the US economy. In Friday’s trading session, the dollar index DXY declined to 94.27, 0.35% lower than its last close.
Fig. GBPUSD D1 Technical Chart
Yesterday, GBPUSD reached a six-week low at 1.40111 and bounced back sharply. RSI (14) is currently moving up from the threshold of oversold territory, signaling that the bull is stepping in. The greenback is expected to slip against the pound continuously, and the market may retest the firm resistance of 1.46575, which was formed on June 07.
Buy stop at 1.43039, Stop loss at 1.41789, Take profit at 1.44746