I was ready for the pound to strengthen yesterday, but not for as much as it did. There was no news which would have pushed the dollar down. The market is continuing to close long positions on the dollar and has been doing so since the ECB didn’t go as far with their monetary policy plans as the market expected.
Market attention today is on the BoE’s interest rate decision. The rate won’t be put up, that’s for sure. It will be important how the votes go though. If it’s 9-1 then the pound/dollar will drop from the U3 to 1.5135. I didn’t bother making a forecast since there could be some surprises in the minutes. If the voting ends up 8-2, the pound will head to 1.5285.
The pound/dollar updated the maximum and left Thursday’s range. The BoE’s meeting will take place and we’ll know how the pound will move next week after close. If we only look at the technical side: the closest target is 1.5230/40.
A hammer is forming.