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23 Mar 2016
GBP/USD – Post Fed gains wiped out
Hawkish comments from Fed’s Bullard pushed GBP/USD pair to 1.4119; a level which was seen ahead of last Wednesday’s FOMC rate decision.
Double blow of Brexit and Fed rate hike talk
Sterling has suffered a double blow of increased Brexit fears and Fed rate hike talk since Monday. Political developments over the weekend in the UK and terror attacks in Brussels heightened Brexit fears and weighed over Sterling.
Furthermore, Fed policymakers repeatedly hit the wires with their hawkish talk, leading to a rise in April/June Fed rate hike bets. Consequently, entire gains witnessed post dovish FOMC event have been erased.
The immediate focus now is on the US new home sales release. However, traders may look through the data, given its not something that the Fed is worried about plus Brexit and Fed rate hike bets are hogging the limelight now.
GBP/USD Technical levels
The spot now trades around 1.4125. Given prices have dipped below symmetrical triangle support of 1.4140 further losses towards 1.41 handle appear likely. A bearish move below 1.41 would mark short-term bullish invalidation and trigger stop losses, leading to a dip towards 1.4032 (23.6% of 1.4669-1.3835).
Conversely, violation at the immediate hurdle of 1.4154 (38.2% of 1.4669-1.3835) would shift risk in favor of a technical correction to 1.42. A break higher would expose 1.4252 (50% of 1.4669-1.3835).
Double blow of Brexit and Fed rate hike talk
Sterling has suffered a double blow of increased Brexit fears and Fed rate hike talk since Monday. Political developments over the weekend in the UK and terror attacks in Brussels heightened Brexit fears and weighed over Sterling.
Furthermore, Fed policymakers repeatedly hit the wires with their hawkish talk, leading to a rise in April/June Fed rate hike bets. Consequently, entire gains witnessed post dovish FOMC event have been erased.
The immediate focus now is on the US new home sales release. However, traders may look through the data, given its not something that the Fed is worried about plus Brexit and Fed rate hike bets are hogging the limelight now.
GBP/USD Technical levels
The spot now trades around 1.4125. Given prices have dipped below symmetrical triangle support of 1.4140 further losses towards 1.41 handle appear likely. A bearish move below 1.41 would mark short-term bullish invalidation and trigger stop losses, leading to a dip towards 1.4032 (23.6% of 1.4669-1.3835).
Conversely, violation at the immediate hurdle of 1.4154 (38.2% of 1.4669-1.3835) would shift risk in favor of a technical correction to 1.42. A break higher would expose 1.4252 (50% of 1.4669-1.3835).