The dollar traded mixed against its G10 peers during the European morning Tuesday. It was higher against AUD, NZD, JPY and CAD, in that order, while it was lower against EUR and CHF. The greenback was stable vs NOK, GBP and SEK.
During the Bank of England hearing at the parliament before the Treasury Select Committee, GBP/USD gyrated around 1.5680, reflecting the restrained mood of investors. The BoE officials reiterated that the future vote on the first rate hike will depend on the macro data. In addition, Governor Mark Carney stressed that the next policy move will be a rate increase and that there’s no discussion to provide additional stimulus. BoE Governor reiterated that rate increases are likely to be limited and gradual and that the MPC members discuss about the pace, timing and degree of the tightening policy. Investors expecting the testimony to clarify a bit the Bank’s dovish stance where probably disappointed. In a question over inflation being below BoE’s target, the answer of the Deputy Governor Jon Cunliffer, that there are risks to the upside and to the downside, displayed the overall stance of the hearing keeping GBP stable against its peers.
GBP/USD moved slightly lower after finding resistance near the 50-period moving average, slightly below the 1.5730 (R1) barrier. Cable remains within its sideways range between that resistance hurdle and the support line of 1.5600 (S1). As a result I would hold a flat stance as far as the short-term outlook is concerned. A clear break below the 1.5600 (S1) line is likely to open the way for the psychological barrier of 1.5500 (S2). On the other hand, a move above 1.5730 (R1) could target the 1.5800 (R2) barrier. Both our short-term momentum oscillators stay around their neutral levels, confirming the trendless bias of the rate. However, as for the broader trend, the price structure remains lower peaks and lower troughs below the 80-day exponential moving average, thus I would consider the overall picture of GBP/USD to be negative.
• Support: 1.5600 (S1), 1.5500 (S2), 1.5430 (S3).
• Resistance: 1.5730 (R1), 1.5800 (R2), 1.5950 (R3).