Sterling’s mixed outlook – TDS

By FXStreet FXStreet – Analysts at TD Securities explained that this month’s edition of the Bank of England’s policy pronouncements leave sterling with a mixed set of signals.

Key Quotes:

“While some of the immediate headline elements, such as the shift in the MPC’s vote and cut to the near-term inflation outlook, skewed to the dovish side, Carney went to notable lengths to temper these conclusions during his press conference. This backdrop is likely to leave the GBP more reactive to external considerations than domestic ones, particularly as the UK economic data release calendar is relatively quiet over the next week or two. This suggests the broader near-term trends are likely to remain intact over the next several sessions.

For cable, much will hinge on tomorrow’s US employment reading and next week’s Congressional testimony by Fed Chair Yellen. Probabilities favour a steeper correction, however, as the market continues to trim its long-USD exposure. Unless the US jobs picture is unexpectedly robust, encouraging Yellen to remain confident in their latest ‘dot plot’ rate path, we see scope for the current rebound to continue to test (Fibonacci-based) resistance at 1.4787 in coming sessions.

Sterling may continue to underperform modestly against the EUR, however, …read more

Source:: FX Street