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    IronFX Essential Intraday Comment | 15/07/2015

    • The dollar was unchanged or higher against almost all of its G10 peers during the European morning Wednesday, ahead of the Fed Chair Yellen semiannual testimony to Congress. The greenback was lower only against EUR.

    • The British pound fell sharply after the country’s unemployment rate for May ticked up a bit, while average weekly earnings fell just below expectations. This was the first increase in the unemployment rate since late 2013, which could suggest that the improvement in the labor market has lost some of its momentum. Nevertheless, the wage growth was the fastest seen in the last five years and with the current low inflation rate the real wages rose even faster. Based on the commentary from BoE officials over the past month, the two successive months of a jump in wage growth will bring the hawks out in force anytime soon. Coming on top of the hawkish comments by the BoE Gov. Carney on Tuesday, I would expect GBP to regain its momentum as investors continue to re-price their expectations for a rate hike by the BoE.

    GBP/USD traded lower during the European morning Wednesday following the UK employment report. The rate hit resistance at 1.5675 (R1) and after the release, it tumbled to find support at 1.5600 (S1). Subsequently, it recovered some of its losses. As long as Cable is trading above the downtrend line taken from the peak of the 22nd of June and above the uptrend line drawn from the 9th of July, I would consider the short-term path to be positive. A decisive move above 1.5675 (R1) could open the way for our next obstacle of 1.5735 (R2). Nevertheless, taking a look at our oscillators, I see signs that another pullback could be on the cards before the bulls decide to pull the trigger again. The RSI has turned down after hitting resistance near its 70 line, while the MACD shows signs of topping. Switching to the daily chart, I see that Cable printed a higher low at around 1.5330, and that is back above the 80-day exponential moving average. As a result, I would consider the overall picture to stay somewhat positive and I would treat the 18th of June – 8th of July decline as a corrective phase.

    • Support: 1.5600 (S1), 1.5550 (S2), 1.5465 (S3)

    • Resistance: 1.5675 (R1), 1.5735 (R2), 1.5775 (R3)

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