Whatever BOE delivers, worth betting cable near top
June 19 (Reuters) -Whatever message the Bank of England delivers on Thursday it's worth betting cable is near the top.
Now that inflation has finally returned to target traders betting on a rise will likely be encouraged to sell by a view toward cutting interest rates in the future.
The UK's relatively high interest rate -- above those for most other major nations -- has been the foundation for sterling's rise. If this prop is removed, it may drop as those invested take profits.
Upside potential is slim, with cable's rally failing just above 1.30 last year, and just below it this year, now that traders are bullish and betting on a rise.
There has only been one close above the 200-WMA - currently 1.2854 - in the past two years, and several rises have failed before it this year. The rally is stretched toward the top of the 20-week Bollinger Bands 1.2865, heightening the probability of a correction.
While the GBP/USD rise, after the close shave with parity in September 2022, has been impressive, it has stalled far below the 1.40-1.45 highs for ranges trading for years after the UK voted to leave the European Union.
Now that UK is out, GBP/USD may settle into a much lower range with the top-end around 1.30-1.35. The yet to be established low may lie within 1.10-1.15.
Expected changes to Japanese monetary policy in July will significantly heighten the probability that investors exit GBP/JPY longs, which is one of the most popular of the carry trades favoured this year.
For more click on FXBUZ
GBPUSD https://tmsnrt.rs/3VuhCWB
(Jeremy Boulton is a Reuters market analyst. The views expressed are his own)
</body></html>Related Assets
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
