On Wednesday two bullish impulses formed on the pound. The first was after the release of the Bank of England’s minutes, the second came after the FOMC meeting and the governor of the US Fed, Janet Yellen, gave a speech. The pound strengthened against the dollar by approximately 180 points.
The Fed dropped its GDP forecast and its growth rate for interest rates. This disappointed the dollar bulls. The pound/dollar went way off the trend. Now the pair has returned to the MA channel and is trading around 1.5831. On today’s forecast I’m considering a roll down to the LB. Only after a rebound should we consider buying pounds again. However, we need to have a look at what the rebound will be like. If it’s a sharp one, it won’t be worth buying the pound. Keep an eye on the general movements across the key pairs. Now to the Daily tab.
The double bottom pattern of 1.5169-1.5189 has come off fully since a W form pattern has formed. The pound/dollar rate reached a 50% level from a fall from 1.7190 to 1.4565. On the hourly the pair is by the upper limit of the MA channel. There’s a risk that a correctional movement downwards from the current level will begin. The growth hasn’t yet finished on the hourly; a bear divergence is needed.
The bulls have renewed their maximum and closed off the fall from 1.5818. If there’s no recoil today, the target is at 1.6115.