The recovery from the mid-1.6900s in the GBP/USD seems to have stalled in the area of 1.6980 on Wednesday.
After hitting fresh multi-year highs just beyond 1.7060 last week, spot initiated a correction lower that seems to have found decent support around 1.6955/50 so far. Recent comments by Governor M.Carney and other MPC members poured cold water over a sooner-than-expected rate hike in the UK, prompting the ongoing sell-off in the sterling. In the view of Emmanuel Ng, FX Strategist at OCBC Bank, “In the near term, the GBP-USD may remain in a cautious range, given that both Carney and Bean took pains to indicate that the timing of rate hikes remained a function of the data flow and that any hikes would be gradual…. A further consolidation towards 1.6900/30 cannot be ruled out at this juncture although we do not think the positive spell surrounding the GBP has been cracked as yet”.
The pair is now losing 0.06% at 1.6976 with the immediate support at 1.6920 (low Jun.18) ahead of 1.6900 (psychological level) and finally 1.6847 (daily cloud top). On the flip side, a breakout of 1.6988 (high Jun.25) would open the door to 1.7034 (high Jun.24) and then 1.7051 (high Jun.23).