Yesterday the GBP significantly fell after statements from the Bank of England that showed regulator’s willingness to continue with monetary policy easing.
The BOE lowered its economic forecasts for this and the next year and mentioned negative effects of the strong Pound on inflation in the country that remains well below its targets. The regulator hinted that the earliest interest rate hikes can be expected no sooner than the second half of 2016, or even the beginning of 2017.
Support and resistance
Bollinger Bands on the daily chart is moving down, while the price range is widening. At the same time, the indicator formed a signal for correctional purchases. MACD is falling. Stochastic is approaching the oversold zone indicating a possibility of an upward correction.
The indicators recommend considering short positions.
Support levels: 1.5200 (13 October low), 1.5164, 1.5125 (beginning of October lows), 1.5085, 1.5045, 1.5000.
Resistance levels: 1.5242 (local high), 1.5275, 1.5300, 1.5347, 1.5400 (local high), 1.5440, 1.5475, 1.5508 (15 October high), 1.5528.
Short positions can be opened from current prices with targets at 1.5120, 1.5070 and stop-loss at 1.5200. Validity – 1-2 days.
Long positions can be opened after the breakout of the level of 1.5200 (with the appropriate indicators signals) with targets at 1.5250, 1.5330 and stop-loss at 1.5170. Validity – 1-3 days.