The British Pound rose after the US Dollar plummeted as markets turn risk-averse after the FOMC signaled a downward revision to inflation forecast, increasing the chances of a rate cut from the US central bank. With this, the Fed joined the rest of the dovish central bankers, standing together against the challenges to global economic growth. In political news, the Cable benefited from the diminishing political uncertainty in the UK as the front runner Boris Johnson comes closer to being the UK Prime Minister. In terms of macroeconomics, UK will release Retail Sales numbers today along with BoE’s Interest Rate decision. Will Governor Carney follow Chair Powell’s dovish footsteps? It remains to be seen.
The Sterling broke above major resistance levels as the bulls are targeting the 200-day moving average which is around 1.2760. A break above that level will probably change the market sentiment and the trend to the bulls’ side. The bears, however, need to protect that level at all cost to remain in control.
Support: 1.2660 / 1.2615
Resistance: 1.27 / 1.2760