GBPUSD, H1, Daily
The Pound took a dip on sub-forecast UK CPI data, headline CPI coming in at a rate of 1.9% y/y, unchanged from February, but below the median forecast for 2.0% y/y. Core CPI also remained unchanged at 1.8% y/y, contrary to the market expectation for a tick higher to 1.9%. The BoE had been anticipating a tick higher in headline CPI, so today’s figures have painted a more benign near-term price picture than the central bank envisaged. Cable printed a low at 1.3032, so far today, retesting the the Asian session low. As for Brexit, while there has been some reprieve of related angst brought about by the delay in the process, the attention in market narratives has been turning the deleterious economic impact the associated uncertainty has been inflicting on the UK economy. In the mix is diminished expectations for the UK government and the Labour party, the principal opposition, coming together on Brexit following a Guardian report yesterday. Yesterday’s robust employment data was backward looking, with more timely March PMI surveys having already highlighted a reduction in employment in the UK’s dominant service sector, suggesting there has been a deterioration in employment conditions that is not yet being reflecting by official data. Recent range lows in Cable are contained within 1.2957 and key 1.3000, which mark out a reference support zone, including the key 200-day moving average. The pair have been below the 20-day moving average for 15 trading days, since March 27. The 20 MA now sits at 1.3095 and the first important resistance level. RSI (45) and MACD (below 0) are both biased to the downside.
Stuart Cowell
Head Market Analyst
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