GBPUSD TECHS: Holding On To Its Recent Gains
- RES 4: 1.2881 76.4% retracement of the Jul 14 - Oct 4 bear leg
- RES 3: 1.2827 High Dec 28 and the bull trigger
- RES 2: 1.2775 High Jan 24
- RES 1: 1.2735 High Mar 05
- PRICE: 1.2705 @ 06:25 GMT Mar 6
- SUP 1: 1.2600 Low Mar 1
- SUP 2: 1.2519 Low Feb 5 and the bear trigger
- SUP 3: 1.2500 Low Dec 13
- SUP 4: 1.2432 50.0% retracement of the Oct 4 - Dec 28 bull phase
GBPUSD traded higher again Tuesday and is holding on to its recent gains. This has exposed resistance at 1.2775, the Jan 24 high, where a break would signal scope for a climb towards the key resistance and bull trigger at 1.2827, the Dec 28 high. For bears, a reversal lower and a breach of 1.2600, the Mar 1 low, is required to once again highlight a bearish threat. This would expose the bear trigger at 1.2519, the Feb 5 low.
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BOE: MNI BOE Review - February 2024: No more hawkish bias
- The MPC removed its tightening bias from its forward guidance. But there was also a more subtle tweak to the “extended period of time” language which we think makes it less forward-looking than before.
- The inflation forecasts show a near-term drop below the 2% target on energy effects, before inflation returns above 2% by the end of 2024 - and stays above 2% longer than in the November forecasts (under market rates).
- However, the constant rate inflation forecasts show inflation sharply missing the target in 2/3-years which indicates the MPC is strongly implying that cuts will be needed - but not as much as the market is pricing.
- The repeated line from the press conference was that it is no longer about whether rates are restrictive enough, but how long they need to remain restrictive for.
- The MNI Markets team assigns subjective probabilities of 25% to a first cut in May, 40% to a first cut in June and 30% to a first cut in August. We discuss our rationale in the PDF.
For the full PDF including summaries of over 20 sellside views click here.
LOOK AHEAD: UK Timeline of Key Events (All Times in GMT)
| Date | UK | Period | Event |
| 05-Feb | 1730 | Jan | BOE's Pill MPR Virtual Q&A |
| 06-Feb | 0001 | Jan | BRC-KPMG Shop Sales Monitor |
| 06-Feb | 0930 | Jan | S&P Global/CIPS Construction PMI |
| 06-Feb | 1200 | Asset Purchase Facility Quarterly Report | |
| 07-Feb | 0840 | BoE's Breeden Speaks At Women In Economics Event | |
| 07-Feb | 1215 | BOE's Woods et al:Treasury Select Committee | |
| 08-Feb | 1500 | BoE's Mann Speaks At OMFIF | |
| 12-Feb | 1800 | BOE's Bailey lecture at Loughborough University | |
| 13-Feb | 0700 | Jan/Dec | Labour Market Survey |
| 14-Feb | 0700 | Jan | Consumer inflation report/ Producer Prices |
| 15-Feb | 0700 | Dec | GDP/ Trade/ GDP First Estimate/Services/Production |
| 15-Feb | 0700 | Dec | Output in the Construction Industry |
| 15-Feb | 1300 | BOE's Greene fireside chat with Fitch Ratings | |
| 15-Feb | 1350 | BOE's Mann panellist at 40th NABE Conference | |
| 16-Feb | 0700 | Jan | Retail Sales |
| 16-Feb | 1940 | BOE's Pill panellist at 40th NABE Conference | |
| 21-Feb | 0001 | XpertHR pay deals for whole economy | |
| 21-Feb | 0700 | Jan | Public Sector Finances |
| 21-Feb | 1100 | Feb | CBI Industrial Trends |
GILT TECHS: (H4) Strong Reversal
- RES 4: 101.51 61.8% retracement of the Dec 27 - Jan 25 bear leg
- RES 3: 101.98 High Jan 3
- RES 2: 100.76 50.0% retracement of the Dec 27 - Jan 25 bear leg
- RES 1: 99.51/100.62 20-day EMA / High Feb 1 and key resistance
- PRICE: 98.92 @ Close Feb 2
- SUP 1: 98.16/97.57 Low Jan 16 / 25 and the bear trigger
- SUP 2: 97.39 Low Dec 11 and a key support
- SUP 3: 96.67 Low Dec 5
- SUP 4: 96.10 Low Nov 30
Gilt futures traded sharply lower Friday. The move lower has defined a key short-term resistance at 100.62, the Feb 1 high. A break of this level is required to reinstate the recent bullish theme and this would open 100.76, 50.0% of the Dec 27 - Jan 25 bear leg. Key support and the bear trigger lies at 97.57, the Jan 25 low. A stronger reversal and a break of this support would confirm a resumption of bearish activity.
