Market Overview

GBP/USD Forecast: Sterling Provides Great Selling Opportunity At $1.3340

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When ECB decided to prolong its asset purchasing program by additional 9 months while cutting the volume of monthly purchases in half to €30 billion last week, the EUR/USD slumped 250 pips in just two days. Of course, the slump on Euro was not only the factor of the ECB decision but also a matter of much better than expected US GDP, that rose 3.0% with political uncertainty in Spain with Catalonia unilaterally declaring independence last Friday adding a pinch of salt.

Since the Bank of England is signalling that it will take back the post-Brexit rate cut this Thursday, the first rate hike in a decade in the UK should be perceived as a "dovish hike“, similar to dovish taper from the ECB last week.

With the GBP/USD trading above $1.3300 level, up from its current cyclical low of $1.3070 marked last Friday, Bank of England‘s rate hike and the dovish tone of Governor Carney during the subsequent Inflation Report press conference is opening the window of opportunity for Short sellers as the rate hike is a typical „buy the rumour, sell the fact“ type of event.
 
Technically $1.3340 is the nearest resistance area representing cyclical high from October 13 and it also represents 50% Fibonacci retracement of the decline from $1.3659 to $1.3027. Should the Bank of England come up with a dovish rate hike,  $1.3340 looks like a great selling opportunity providing the scope for a couple of big figures profit.

Posted-In: Forex FXStreet FXstreet.comForex Markets

 

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