Bank of England's Bailey is speaking at an event in London. Questions are expected
- Basic fundamentals of inflation profile showing sharp fall in inflation in 2023 remain in place
- Range of things are on the table for August MPC meeting
- We should not precommit to what we will do
- UK is facing a very big real income shock
- Bank of England needs to assess how much a real income shock will bring down inflation itself
- We expect inflation to be back to target in around 2 years other things being equal
The GBPUSD traded to a new year low earlier in the North American session taking out the low from last week at 1.1875, but could not sustain downside momentum (the low reached a new year low at 1.18657).
The subsequent move back to the upside took the price back above the swing low from July 5 at 1.1898. The high price reached 1.1906 but has rotated back down to 1.1891 currently.
Drilling to the 5 minutes chart below, the corrective move off the low reached to a 38.2% retracement of the last trend leg to the downside today (from the last corrective high that was testing the 100 bar moving average on the 5 minute chart). That retracement level comes in at 1.19054. It would take a move back above that level to give the buyers more confidence that there should be more upside momentum on a correction. The falling 100 bar moving average (blue line) currently at 1.1924 would be a key target to get to and through, to add to that upside corrective confidence in the short term. Absent that, and the sellers are still in control.
