Sterling bears maintain the upper hand
Oct 17 (Reuters) -Since the notably soft UK inflation data, cable has been anchored to the 1.30 handle, and though the pair is in consolidation mode, this looks to be the case of taking a breather before the next leg lower as opposed to the makings of a rebound.
GB/US rate spreads have continued to move in favor of the dollar and thus shorts should maintain the upper hand, bringing into focus the 100-day MA at 1.2956.
At the same time, rebounds are likely to be capped at 1.3060-70, marking the 200-hour MA and pre-CPI breakdown levels. However, should cable push above resistance, this would likely be a concern for shorts.
Looking at the macro events ahead, retail sales are due Friday, though, the bigger risk for the currency will be BoE Governor, Andrew Bailey, who is scheduled to speak next week (Oct 23/26).
It was Bailey who first flagged the potential to cut rates at a faster pace. Now that he has the data, the upcoming speeches pose a downside risk to GBP.
For more click on FXBUZ
GBPUSD hourly chart https://tmsnrt.rs/3AeoLUd
(Justin McQueen is a Reuters market analyst. The views expressed are his own.)
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