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Cable inched lower against the greenback on Wednesday, decreasing the price of GBP/USD to more than 1.5870 amid Bank of England’s quarterly inflation report.
Technical Analysis
As opposed to trading session on Tuesday, today the market is overwhelmed with the bearish pressure. The pair opened the Asian session at 1.5916. As of this writing, the pair is being traded around 1.5857, gradually moving down to test a critical support around 1.5830. A successful breakout will lead the pair to test the next milestone at 1.5784.
On the upside, the pair may test the crucial resistance at 1.6000, the psychological number and the trend line resistance. The said level acted as resistance on many occasions during the last two weeks.
The overall bias is bearish because of lower lows on the daily chart. The bias is expected to remain bearish as far as the 1.6000 resistance area remains intact.
ILO unemployment Report
The ILO unemployment Report figure for this September is 6.0%, same as that of August while missing the 5.9% as forecasted by analysts. Indicating a shrinking economy, a high figure is considered bearish for the cable and vice versa. Thus a high reading spurred bearish momentum in the price of GBP/USD.
BOE Quarterly Inflation Report
The Bank of England has published the inflation report. The dovish sentiment of the report indicated weaker global growth and no clear indication about the first interest rate hike. The dovish statement spurred bearish momentum in the price of the GBP/USD.
Trade Idea
In the light of technical and fundamental outlook, buying the pair on the emergence of bullish pin bar or bullish engulfing candle could be a good strategy in short to medium term.
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