Sterling showed a significant recovery on Monday with +63-pips price action. Today, GBP/USD was modest with +4 pips profit and the pair clocked 1.2432 high, then retreated 1.4221, at which the pair is currently trading intraday. GBP/USD still under pressure by recent strong US Dollar performance as the US Dollar Index clocked 101.24 April-2017-fresh-highs, although the index currently trades 100.93, is still a threat for the Sterling and promises for further declines for GBP/USD.
Mrs Yellen, head of U.S Fed crossed wires yesterday with the following headlines and the coming hours will decide how the market will digest Yellen's speech as traders awaited more positive hints for coming US Fed hikes.
"I think we have a healthy economy now"
"Whereas before we had our foot pressed down on the gas pedal trying to give the economy all the oomph we possibly could, now allowing the economy to kind of coast and remain on an even keel -- to give it some gas but not so much that we are pressing down hard on the accelerator -- that's a better stance of monetary policy," she said. "We want to be ahead of the curve and not behind it."
Today, UK Data pocket is heavily loaded with Consumer Price Index CPI, Producer Price Index PPI, and Retail Price Index with CPI in focus. The UK CPI is expected to be weaker at 2.2% y/y in March versus a 2.3% reading booked last. On monthly basis, the consumer prices in the UK are expected to arrive at 0.3% versus 0.7% on previous sessions. GBP/USD low volatility is justified by markets being poised for economic data arrival today, but there will volatility after releasing data which will be eyed by BOE correlated with Inflation and coming interest rate decision.
Fundamentals:
1- GBP - CPI + PPI + RPI today at 8:30 AM GMT.
2- GBP - BOE Gov Carney Speech tomorrow at 8:00 AM GMT.
3- GBP - Average Earnings Index 3m/y tomorrow at 8:30 AM GMT.
Technical:
Trend: Bearish Sideways
Resistance levels : R1 1.2444, R2 1.2494, R2 1.2545, R4 1.2618
Support levels : S1 1.2375, S2 1.2321, S3 1.2267, S4 1.2195
Remark : UK Data today is crucial for GBP/USD trend coming hours with expectation of high volatility shortly after release. Although cable trend is currently bearish sideways, the data outcome could re-set GBP/USD Trend. U.S Index levels to be taken highly into consideration.