FxWirePro short term outlook: Pound to drop 800 pips against Dollar

Pound’s advance against Dollar today, above 1.45 handle, got halted by weaker inflation reading for April.

Retail prices rose 1.3% y/y in April, compared to 1.6% prior. Consumer price index was up 0.3% y/y compared to 0.5% in March. Even core consumer prices dropped by 0.3% to 1.2%y/y. Only where inflation was visibly strong was housing sector, where prices rose by 9% from a year back, compared to 7.6% in March.

There has been no economic dockets supportive of Pound or showing resilience in UK economy. Still Pound could advance against Dollar on broad based weakness in green buck, improvement in risk appetite, improvement in oil price and countertrend to Brexit.

However, charisma of all the above, except for maybe oil is somehow fading and focus will turn to Brexit once more, when it’s just a month away, including the date in monthly options for the first time.     

Trade idea-

There is a strong possibility that Pound will go for a dive against Dollar ahead of the referendum as much as 800 pips from current price 1.447.