Being under attack of central banks’ meeting minutes today and tomorrow, speculations boosted sterling to near $1.5000 level. Completely neglecting speech of Fed’s representative Powell and probably not paying attention to New York Fed’s Dudley later in the session, dollar is losing against all of its major counterparts, preparing for the evening.
Federal Open Market Committee (FOMC) meeting in March provided little worse economy projections, undermining previous strength of the US currency and leading it to correction, confirmed by already worse labor data. Generally first quarter did not provide much support for the constantly mentioned data-dependent rate-hike possibility in June, so investors are becoming more sceptical.
We expect the FOMC minutes as likely to support the dollar, as the dovish pressure has already undermined its previous bullish rally and first shock provided to markets is already behind us. From the fundamental point of view we remain bullish for the dollar, bearish for the GBP/USD from a long-term perspective, to $1.47 level.
Bank of England’s meeting is not expected to point to any crucial news related to rate-hike bets, so we do not estimate much volatility to come tomorrow after its release.
From the technical point of view, we may get closer to $1.50 level, but do not expect the currency pair to settle above this threshold for a longer time. Evening’s volatility could be higher due to FOMC, but not for long. We expect it to get back to support at $1.4841, or to psychological $1.4800. If there still came some news, boosting sterling or undermining dollar strongly, we could expect it to reach resistance level at $1.5094 above the $1.50 threshold.
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