GBPUSD sellers are in play
The pound fell against the dollar earlier today. The Bank of England kept interest rates unchanged today. However, as Justin pointed out in his post-decision posts, the BoE's latest statement contains subtle dovish hints pointing to possible interest rate cuts in the near future. “As part of the August outlook round, committee members will consider all available information and how this impacts on the assessment to be set by the ECB,” the Bank of England added in forward guidance. The risks resulting from continued inflation are recedingThis indicates the possibility of a rate cut in August if current data trends continue.
In addition, the Bank of England has already begun to find excuses to ignore high inflation in services. They stated, “Positive news in service price inflation compared to the May report It hasn't changed significantly The deflationary path the economy was on. This view was supported by evidence suggesting that the recent force in services inflation included the regulated and indexed components of the basket, and the volatile components. Such factors will not push inflation higher in the medium term. The fact that the policy decision was “well balanced” suggests that policymakers are carefully thinking about the next step, paving the way for lower interest rates.
Technically, the price has fallen below the 100-bar MA at 1.2697, and the 200-bar MA on the 4-hour chart is currently at 1.26891. The price also fell below the swing zone (red numbered circles) between 1.26748 and 1.26858.
Sellers trade below those levels.
Going forward, if the price can stay below the 200-bar swing/EMA zone at 1.26858 to 1.26891, sellers can push lower (this is the risk of a close given the breakout down today).
Now….these levels were broken on Friday, Monday, and also on Tuesday, and each time the break failed. Today is the fourth time below those levels. So the sellers actually had their chance and every time they got it wrong.
However, is this the level that heads towards the 100 day EMA at 1.26386 and then makes traders see what is happening near this level? This is the game, given the break today and for the traders who are more bearish now.
If the 100 day EMA can be broken (it will also move below the 38.2% of the up move from April), traders will be looking towards 50% of the same move higher at 1.25793 and the 200 day EMA at 1.25518.
