Sterling remains well bid on an otherwise data-free day to end a week in which the currency has fallen to a six-month low versus the euro. At the same time the unit has strengthened against the dollar to an eight-month high. Market stories suggest a large euro/sterling sell order connected to a company dividend payment is keeping the euro pinned down while bolstering the pound against the dollar at $1.6051. The euro buys 87.72 pence. The pound has performed well during the week despite signs that the labor market is losing steam while consumer confidence is also stalling. Next week the coalition government will unveil spending plans in an effort to reduce the sizeable budget deficit currently running at an equivalent 11% of GDP.
The Bank of England is likely to follow the US QE PROGRAMME despite the fact that inflation has now exceeded the official policy ceiling of 3% for seven months in a row now. Unlike that of the U.S., the British government is taking budget control rather seriously in progress austerity measures are likely to weigh heavily on the ability of the economy to weather the storm.Still, it’s hard to see how weaker economic activity ahead will permit inflation to remain as high. The pound rose against the dollar to $1.6098
Daily Chart Gbp/Usd
H4 chart GBP/USD
H4 Chart with Ichimoku
The trend for GBP/USD is bullish in longer term. Looking at the Daily Chart, wait for its retracement near the support trendline(Red in Color), and to set up a Long trade for a possible 1.6105(0.00% Fibo Retr) and then follows by possible 1.6500 , (1.618 Fibo Extension)
On the H4 Chart with Ichimoku, we expect GBP/USD to retrace near the Ichimoku Cloud top Resistance, near 1.5890, (or the 23,6 Fibo Retr), before it surges up toward the 1.6500 target on longer term.
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