The cable enjoyed another stellar move, managed to breach the resistance at 1.5552, the previous swing high. The cable refreshed a new high of 2015. The conservative party won the election and hawkish inflation report is expected. The Committee’s latest inflation and output projections will appear in the Inflation Report to be published at 10.30 a.m. on Wednesday 13 May. These factors boost the sentiment on the British pound. The Bank of England’s Monetary Policy Committee voted to maintain the interest rate at 0.5% at its meeting on 8 May. The Committee also voted to maintain the stock of purchased assets financed by the issuance of central bank reserves at 375 billion pounds. The minutes of the meeting will be published at 9.30 a.m. on Wednesday 20 May.
Upcoming data: Today, traders eye manufacturing production data on a monthly basis. From July 2014, UK manufacturing data missed expectations except for Nov 2014 and Jan 2015. The April readings met the expectations of 0.4% but remained below the previous 0.6% 2015. We expect figures to remain flat for the March ending, indicating weak manufacturing production in the Q1 2015.
Technical view: The cable halted at 161.8 FE 1.5620, made a high at 1.5613 at yesterday’s session. The higher lows and higher highs formation are developing in the four-hour chart. At yesterday’s session, we recommended buying above 1.5450 with an intraday target at 1.5550 and positional target at 1.5650. The cable managed to close above 20Wsma after 37 weeks. The 20Wsma is found at 1.5125. The 200Dsma is seen at 1.5650, which is the nearest strong resistance. Support is found at 1.5520 and 1.5500. We recommend intraday fresh buying above 1.5620 with a small target at 1.5640/1.5650. A daily close above 1.5650 will produce another 100 pips on the higher side (like 1.5780). The hourly chart represents a mild negative divergence. The selling pressure is likely to be built up below 1.5498 towards 1.5465, 1.5400, and 1.5360. To strengthen this view, bulls must close above 1.5640. We recommend traders to remain patient for a good dip to buy again; big trades are not available on the higher side at the moment.
Trade: Selling below 1.5495
The material has been provided by InstaForex Company – www.instaforex.com