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Published On: Tue, Aug 12th, 2014

The British pound trading sideways with a bearish bias

The cable is gradually drifting lower amid expectations for an interest rate hike shifting for next year.

The British pound trading sideways with a bearish bias

Yesterday the pound was trading sideways making attempts on a recovery from the losses it had endured recently, though unsuccessfully. It closed the 11 August trading session at 1.6786, a 0.06% gain for the day.

The UK Leading indicators index made a rise of 0.6% in July, a faster pace compared to last month’s 0.5% gain. Early this morning the BRC Retail Sales Monitor for the month of July indicated a -0.30% decline, which was still better than June’s decrease of -0.80%.

For the entire Asian session the cable has been drifting lower; GBP/USD is currently at 1.6758. Our expectations are that the pair is going to continue its way down and will test the 1.6690 key resistance level. At this point, a bounce is expected. The correction will probably not last long, however, as expectations that the Bank of England will not proceed to a rate hike this year will continue to drag the British pound lower.

Resistance levels for GBP/USD: 1.6825, 1.6895 and the crucial one at 1.70; a breach of the latter one will negate the bearish case scenario in front of the cable.

Support levels for GBP/USD: 1.6690 and 1.6460.

With the UK economic calendar empty today, markets are expecting the ILO unemployment rate report scheduled for tomorrow. Surprises on either side are capable of giving short-term direction to the pound.

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