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    IronFX Intraday Comment | GBP/USD | 05/11/2015

    • The dollar traded mixed against its G10 peers at midday in Europe. It was higher against GBP and JPY, in that order, while it was lower vs NOK, EUR, NZD and CHF. The greenback was virtually unchanged against AUD, CAD and SEK.

    • The Bank of England once again kept the interest rates unchanged at 0.5%, and the votes stayed 8-1, with Ian McCafferty again the lone dissenter. In the meantime, in its quarterly Inflation Report the Bank downgraded its assessment of its medium-term growth and inflation prospects. The Bank now sees risks slightly to the downside in reaching their 2% inflation target in two years, compared to a more upbeat view in the previous Inflation Report. The British pound plunged following the releases as interest rate hike expectations were pushed back. Even though in the press conference following the decision, BoE Gov. Carney kept a fairly hawkish tone, emphasizing the erosion of slack in the economy and tightness in the labor market, I think the pound could remain under selling pressure.

    GBP/USD collapsed following the BoE’s decision to downgrade its growth and inflation forecasts. The pair fell below the 1.5360 (R2) hurdle, confirming a forthcoming lower low on the 4-hour chart and shifting the short-term outlook negative. The plunge drove the pair below the support (now turned into resistance) of 1.5300 (R1) and therefore I would expect the bears to target the 1.5250 (S1) zone, defined by the lows of the 28th and 29th of October. Our momentum studies reveal downside momentum and support the notion. The RSI hit resistance near its 50 line and turned down, while the MACD, already below its trigger line, has just turned negative. What is more, both these indicators stand below their respective downside resistance lines. On the daily chart, the rate still oscillates above and below the 80-day exponential moving average. Having that in mind, and that there is no clear trending structure, I would still hold a “wait and see” stance as far as the overall outlook of the pair is concerned.

    • Support: 1.5250 (S1), 1.5200 (S2), 1.5140 (S3)

    • Resistance: 1.5300 (R1), 1.5360 (R2), 1.5400 (R3)

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