GBP/USD rises to a high of 1.3211
And nears a test of the 100-hour MA (red line) @ 1.3212. The pair was trading near the lows prior the decision at around 1.3110 levels but the vote change and some tweaks in the language to the more hawkish side (change in the QE reduction target rate) gave reason for buyers to push sterling higher on the day.
But this is where the real test begins for buyers in my view. The 100-hour MA is a key near-term level to break and a firm hold above that and yesterday's high of 1.3216 would be an important first step for some recovery.
The change in the vote count means that there should be some repricing now on expectations for a BOE rate hike in August. But what else has changed?
Essentially, nothing has.
Despite market pricing of an August rate hike now moving to ~60% from ~40% prior to the decision, at the end of the day, it will still ultimately come down to economic data.
Prospects of a rate hike may have gone up a little but for me, I reckon this is about as good as it gets for sterling bulls as there is very little else to go on until we see concrete evidence in economic activity to support a case for an August hike.
