After repeated rejection around 1.6250, finally pound pulled back sharply after disappointed US job data and BoE decision of holding cash rate steady, the focus has now been shifted to Britain’s quarterly inflation report and Mark Carney’s address which is scheduled for tomorrow.
At the moment of writing, cable is being traded near 1.6412 which is a confluence of 55 Daily Moving Average (DMA) and 38.2% fib level. A daily close above 1.6410 handle may expose 1.6500-10 that is psychological level and 61.8% fib level, ahead of 1.6568 i.e. 76.4% fib level and last major resistance ahead of previous wave’s swing high. Bias will remain bearish as far as price is below 1.6624, high of 28th January.
On downside, immediate support may be seen around 1.6359 which is 38.2% fib level ahead of 1.6250-60 area i.e. 50% fib level and old double top resistance-turned-support. Below 1.6250-60, next major hurdle for beers can be noted near 1.6165 that is 61.8% fib level. A break below 1.6250 will result in Lower Low (LL), thus confirming the bearish bias about cable.
Today Federal Reserve’s new chairperson Yellen is schedule to address during the US session; this will be her first speech as Fed head. Investors will closely be monitory her views about future monetary policy stance particularly in a scenario when January non-farm payrolls remained far lower than expectations hence spurring doubts about labor market progress.
On Wednesday, Bank of England (BoE) is due to release inflation report for last quarter (Q4). It will be a very high profile event as recently we noticed that the entire focus of BoE policymakers had been shifted from jobless rate to inflation. Mark Carney is also scheduled to speak; he will most probably talk about Forward Guidance i.e. what will be BoE stance if unemployment rate falls below 7.0% threshold.