FXWIREPRO: Extending Pound/dollar Target to 1.55 Area
In previous article, available at http://www.econotimes.com/FxWirePro-Pound-could-gain-towards-15-on-weaker-Dollar-178482 , we at FxWirePro fundamental, suggested that Pound might gain towards 1.5 area over weaker Dollar. Despite recent setback of few 100 pips from key resistance area of 1.45 against Dollar, we are maintaining our target and extending it further.
We expect, Pound to gain few 100 pips more than 1.5 area and may reach as high as 1.55 area on weaker Dollar. Stop loss for the trade remain around 1.385 area.
Last week’s FED projection materials show that policymakers have cut back their expectations of sharper hike path by 50 basis points and now more aligned to market expectations. Even if current market expectations shift from one hike in 2016 to two as indicated by FED’s dot-plot, we think that is not likely to be enough to support US Dollar.
Key components, that has been fuelling Dollar’s strength, monetary policy divergence is now close to its limit. Price actions in Euro, post European Central Bank easing, earlier in the month, strongly suggests so.
It would also be a nice contrarian play ahead of the referendum on June 23rd. Since most retail participants are net short Pound, Pound may recover fast from already oversold position.
Focus for today is inflation data for February. Pound is currently trading at 1.439 against Dollar.
The material has been provided by InstaForex Company - www.instaforex.com