It was important that cable closed above 1.7000 on Friday and that level continued to hold despite upbeat headlines from the US. GBP/USD has now rebounded to 1.7015 from 1.7002.
I like a long in this pair with a stop below 1.7000.
The week is littered with risks. Carney appears in front of a before to Parliament’s Treasury Committee tomorrow to answer questions from lawmakers then on Thursday he will brief journalists on the BOE’s financial stability report.
Carney is wary of pound strength but there’s no way he can back away from talk of hiking rates. Today, dovish BOE’s Miles wrote in the Telegraph that it’s much more likely rates will rise before the end of May 2015. Even if Carney simply repeats talk about rate hikes, the OIS market is only pricing in a 64% of a hike before year end. They’re still plenty of room for that to rise.
