Alreayd in downtrend on strong dollar and worsened rate-hike outlook, the so-called cable currency pair dropped even further after the release of recent inflation data. Pair is still trading close to its 2010 low.
Consumer Price Index (CPI) reached held its all-time low, as price generally remained unchanged (CPI 0%), while Core CPI reading reached eight-year low, rising only 1.0% over the reported period, according to National Statistics (ONS).
Generally, last year saw firstly the British pound to be in favour of sooner rate-hike but the situation has changed and tightening challenge from the market's point of view boosted mostly US dollar this year.
Last Federal Open Market Committee meeting minutes made it clear that most of policymakers expect the rate-hike to come still this year (conversely with fears that it could be postponed to 2016 as for example George Soros and Warren Buffett stated), supporting the US currency against most of its major counterparts.
Nevertheless, first quarter data from the US proved to be disappointing, as well as couple of data from the UK. From the fundamental point of view, we still remain bearish, albeit with limited pressure.
From the technical point of view, we expect the currency to drop even further, to touch $1.4581. If the trend persists, TP should be set at $1.4511 and $1.4395.
In we see a short-term correction, the pair could reach resistance at $1.4716, or even further at $1.4834.
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