I think we can rule out any fun and games over the BOE rate announcement and more focus will be on the quarterly inflation report next Wednesday. The economy is ticking along and there’s no way they will be looking at rates at all.
Cable has ducked under 1.63 again and the level is playing the pivot role. The August 2009 trendline is still place at 1.6273 with further support at 1.6260 and the 100 dma at 1.6243
GBP/USD daily chart 06 02 2014
Topside we’ve got minor resistance at 1.6315-30/35/40 so apart from any last minute position adjustment we could have our range for this morning.
EUR/GBP is where the fun could be had over the two releases as there is a little risk that the ECB act and that will obviously send the Euro lower. We’re still managing to hold the Feb 2013 support line despite a couple of false breaks and the 100 wma is keeping rallies through 0.83 in check.
EUR/GBP weekly chart 06 02 2014
I’m not feeling overly confident on cable staying afloat up here as when we have a lack of UK data or action we tend to see sellers coming in and pushing it lower. I’ve cut my cable position mainly because I was bored with it, it had played out as I’d planned and the latest duck under 1.63 tells me the upside may be limited. I’ve also taken profit on my GBP/JPY longs based on my fears for sterling. I’m still short EUR/GBP and am happy to ride that over Draghi as he’ll be his usual dovish self. With little wriggle room on rates he will need to talk the market around once again why falling inflation isn’t a problem and that they are ready to act if needed.
So no fireworks from the BOE but I feel we may get some from Mr Silver tongue at the ECB later.
