In an environment where many major currencies are range-bound, the British Pound has put in a recent streak of weakness.To get more news
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Brexit remains as a driver but the notable item from this week was talk of potentially negative interest rates in the UK.
Next weeks economic calendar is rather light on high-impact data
releases, pointing to the possible continuation of risk themes as a
primary driver.
GBP Bounces After Last Weeks Support Breaks
It has so far been a brighter outlay this week for the British Pound
as the currency has bounced against both the US Dollar and the Japanese
Yen. Last week was marked by weakness in Sterling as sellers pushed each
of those pairs down to fresh monthly lows; but at least a portion of
that has been offset this week as both GBP/USD and GBP/JPY have thus far
put in net gains, even as talk of negative interest rates from the BoE
began to circulate through the headlines.
This dynamic isnt necessarily discounting the prospect of negative
interest rates as much as it may be driven by a related theme in risk
markets. As discussed on the topic of Gold and then US equities, an
interview from FOMC Chair Jerome Powell that was broadcast on Sunday
night has helped to add some heat to the current risk rally, and this
looks to have taken a toll on both the US Dollar and Japanese Yen
getting hit with another bout of weakness; which has helped to buoy both
GBP/USD and GBP/JPY.
In Cable, the big question is whether sellers are going to react to
that next spot of lower-high resistance, and there‘s a few possible
areas where that may develop: From the below chart current support
showed up around the 38.2% retracement of the March major move; and the
50% marker from that same study is very nearby, just above the 1.2300
handle. That area helped to provide a couple of spots of support in
late-April and then again in early-May. Above that, the 61.8%
retracement lines up very closely to the 1.2500 level, producing an
element of confluence that may constitute an ’r2 zone of resistance.
