FxWirePro: GBP seems weaker ahead of BoE’s interest decision – cable drifting along sloping trend line

Amid plotting both weekly and monthly charts we have encountered with enough bearish swings with mammoth volumes show the tendency to confer trend line.

The Bank of England is on center of attention as monetary decision is scheduled to be announced shortly. For now it looks like the divergence between FED and BoE is getting wider and it would be before the BOE who follows the Fed in commencing its tightening cycle.

Sterling has had an awful beginning to the year as it has been talked down by many currency experts which is quite reasonable and politicians warning about risks to the UK economy have not helped the pound's cause.

To begin with Q1 series the pair has broken a strong support at 1.4725

The formation of falling wedge was completed with bearish engulfing candle to break below base line of this pattern to signal even more dips are underway coupled with other bearish indications.

Leading oscillators of all time periods (RSI and stochastic) indicate selling pressures. Current RSI is trending southwards at 42.6304 converging with every price dip.

While on slow stochastic curve has reached oversold region but absolutely no scenes of bullish crossover, currently %D line crossover is moving on even below oversold territory.

While the current spot FX is sliding below lagging indicator (21DMA) on all time frames again that signifies these price dips to prevail further in long term.

Today we are expecting a dovish tone to the BOE who insist that their decision will be determined by the outlook for inflation.

Given the weakness in crude prices it comes as little surprise that predictions for the first rate hike are slowly but surely being pushed into the latter part of 2016.

Trade recommendation: We recommend buying binary put options for targets of 50-60 pips to reach out at 1.4325 with a stop loss at 1.44 levels, thereby observed handsome risk reward ratio.