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GBPUSD long bias

Cable appears to have found a base and has not managed to sustain below 1.2000 for very long, forming something of a recovery. After Fridays rally in the USD we are looking for a further push down perhaps as far as 1.2000 again before contuining with our bias long. This would be supported with a further downturn in the USD midweek but most likely driven by UK CPI which is released on Wednesday morning.

The image below shows what we are looking out for as the week begins, and the areas of interest. As we can see there is room to move to the upside as the USD weakens and clear liquidity zone around 1.2400. This bias would be supported with inflation figures beating expectations once again hitting 10% + giving the pound a boost.

Long term expectations remain weak for the pound as a period of prolonged stagflation is expected from Q4 onwards.

NOTE: Wednesdays CPI will cause high volatility and therefore be cautious about entering a trade before hand.


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