After correcting a little after a sharp rally that was cause by better than expected UK CPI data. It is obvious that expectations are high and unless proven otherwise we will probably see Pound rising versus US dollar in the meantime.
However, two pieces of information that can rock the boat are coming today from US. US CPI (Consumer Price Index) and FED minutes are to be released during US session.
CPI is coming at 12:30 GMT and FED minutes at 18:00 GMT. These two may completely turn things around. Better than expected US CPI and bullish hawkish FED minutes will be taken as a sign that FED will start raising interest rates sooner than BOE. On the other hand, worse than expected data and dovish tone inside FED minutes will re-confirm that BOE is ahead of FED and US dollar will go down against British Pound.
Pound is rising at the time of writing. If it turns around, there is plenty of support below. The first level is right at early European session lows: 1.5662. Key support is yesterday’s low at: 1.5644.
I tend to think that the second level is not reached. On the other hand, resistance is right ahead at yesterday’s high: 1.5717.
Let’s wait and see what happens when US markets open and fundamental releases come out.