Being driven mostly by dollar volatility and rate-hike bets, sterling traders are about to see also Bank of England's (BoE) meeting minutes after an hour. Trading remain cautious and the resistance at $1.4970 is kept stable.
BoE minutes are expected to show all the nine members voting for keeping the monetary policy unchanged, not providing much ground for the UK currency. Minutes should point to satisfactory data a joblessness and economy growth, nevertheless, inflation issue remains the hottest topic, as it has been pushed to extraordinary low levels after oil price shock.
Now most of the traders expect the rate-hike to come, but more likely later than sooner as low inflation is seen as the major laggard, which needs to be solved before tightening. Permanent dissenter Andrew Haldane even stated at February meeting that “the next change in the stance of monetary policy was roughly as likely to be a loosening as a tightening."
This remains a challenge to the US dollar, which also struggle with justification of a rate-hike and its proper timing. Bets for the sooner rate-hike in June lifted dollar against most of its major counterparts, but disappointing Q1 eased their bullish strength and greenback has already eased from its previous rally.
Nevertheless, we remain bullish in a long-term due to expected sooner rate-hike in the US as in the UK.
From the technical point of view, the $1.4970 is a strong resistance level, appropriate for take profits. Further bullish resistance could be seen at $1.5035. Dollar bulls should expect the currency pair to come down to reach the support level at $1.4821 or further at $1.4716, or $1.4638.
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