The Pound continues its recovery as the weakening greenback benefits most of the major G10 currencies. The US Dollar started the current selloff on Friday after the Federal Reserve’s Vice Chairman, Richarad Clarida made some remarks during an interview with CNBC which signaled the possibility that the Federal Reserve will change their stance in regards to gradually increasing interest rates every three months. Investors are pricing in this possibility because Clarida mentioned that the Fed are nearing a neutral interest rate state, and such state makes sense from his own perspective. He also defined a neutral state as one with interest rates between 2.5% and 3.5%, and after December interest rates will be at 2.5%, hence the probability of more than three rate hikes in 2019 is low.
For today, the pair will continue to be mainly driven by the US Dollar as some important US housing figures will be released. Nevertheless, investors need to keep a constant look out for any major announcement or remarks related to the Brexit plan vote from the UK parliament.
The Pound continues to trade around the 13-period moving average as a reflection of the indecision in the market. The long term bias for the pair is still bearish given that prices are trading below the 50 and 200-period moving averages. However, the short term bias of the pair is bullish as prices are trending slightly above the 13-period moving average. Depending on the market's sentiment surrounding the outcome of Brexit, the pair will either break below the 13-period moving average and lead to a general shift in the bias of the pair or break above the 50-period moving average.
Support: 1.2807 / 1.2729
Resistance: 1.2937 / 1.3047