Pound spikes above 1.40 vs dollar in expected reaction to BoE’s hawkish hold
Sterling cracked 1.40 barrier and spiked to three-day high at 1.4014 after BoE maintained hawkish hold on its monetary policy meeting today.
The UK’s central bank kept interest rates as expected at 0.5%, with policymakers voting 9-0 to keep rate at 0.5%, but kept hawkish tone in its report, saying that the policy will be tightened (the earliest in May and latest in November) if economy grows as expected and to set monetary policy that inflation returns to target.
Hawkish hold from BoE was boost for those advocating rate hike in May.
Pound moved in rather expected reaction to such scenario, but needs to close above 1.40 barrier to generate signal for further recovery.
Fresh strength improves near-term sentiment and reduces immediate downside risk for extension of steep three-day 1.4277/1.3835 fall.
Fresh near-term bulls need to hold above 1.39 handle (daily Kijun-sen) which is seen as minimum requirement to keep immediate focus at the upside.
Firm break above 1.40 barrier (Fibo 38.2% of 1.4277/1.3835 downleg) is needed to maintain fresh bullish bias for recovery extension towards 1.4056 (daily Tenkan-sen) and 1.4109 (Fibo 61.8% of 1.4277/1.3835).
Bearish scenario expects return below 1.3900 to increase downside risk for retest of key support at 1.3841 (Fibo 38.2% of 1.3026/1.4344, Oct-Jan rally, reinforced by rising 30SMA), loss of which will be strong bearish signal.
Res: 1.4000; 1.4056; 1.4109; 1.4150
Sup: 1.3940; 1.3900; 1.3841; 1.3796