- GBP/USD lifting to test 1.4000 ahead of London markets.
- Brexit concerns recede as BOE hawkish stance plays out.
GBP/USD has lifted to kick off the week’s trading, testing into the 1.4000 handle in the pre-London markets.
The Sterling is capitalizing on Dollar buying taking a break in the early week, with Brexit concerns currently forgotten as an increasingly hawkish outlook from the Bank of England (BOE) takes center stage for the pair.
BOE Deputy Governor Dave Ramsden turned surprisingly hawkish over the weekend, after voting against a rate increase last November. Deputy Governor Ramsden went on record, stating he expects a rate increase “somewhat sooner rather than somewhat later”, sparking some confidence in the Sterling. Brexit continues to weigh on the Sterling in the underlying, with hardline Brexiteers within Prime Minister May’s ruling Conservative party continuing to rage against PM May’s ‘soft Brexit’ approach to negotiations with the EU. PM May is expected to deliver her outline for what Brexit will look like on Friday in a speech, where markets anticipate May to deliver a soft Brexit outlook when the EU-UK separation process begins next March.
Across the Pacific, Monday will see a speech from the Fed’s Bullard at 13:00 GMT, Chicago Fed National Activity Index at 13:30, New Home Sales figures at 15:00, and the Dallas Fed Manufacturing Business Index at 15:30; figures are expected to take a backseat though, with the Fed chairman Jerome Powell slated to give his congressional testimony on monetary policy and the economy. Chairman Powell is slated to speak at 15:00 on Tuesday, and markets will be tuning in to anticipate the Fed’s movements going forward.
The pair has fared well despite the recent resurgence in Dollar bidding, finding support at the 34 EMA from the recent low at 1.3856; H4 charts show the pair caught in a sideways triangle, while intraday support is priced in at 1.3962 and 1.3924, while resistance sits from 1.4066 to 1.4144.