FxWirePro: GBP/USD outlook – focus for 2016

Pound is declining steadily against Dollar before and also after rate hike from US Federal Reserve of 25 basis points. Before Bank of England (BOE) published its weaker inflation outlook and started producing dovish monetary policy statement, Pound was expected to be the key contender to take the baton from Dollar, while BOE takes it from FED.

Now the popular expectations have shifted and economist are now expecting another few firings from FED, before BOE finally takes over.

Focus will be on inflation statistics as well as wage growth for this year. So far there is only one hawk in BOE board, Ian McCafferty, which we expect to grow by another two till September. Unless situation worsens over China, BOE could be very close to a hike by end of year, which could come into focus post June.

Trade idea -

We have long remained focused to the downside for the pair. Our call to sell GBP/USD @1.52 and 1.54 still active, with stop loss around 1.58 and targeting 1.425 area. Interim targets are 1.49 and 1.475. First one is reached.

In this post, we would like to add another interim target of 1.45-1.445 area.