GBP/USD hovers near session lows as the dollar leads the way again
The pair is now trading at 1.3922 just off the lows at 1.3918 on the day. Looking at the daily chart, the daily close below the 30 January low of 1.3980 opens up the way for a retest of the 100-day MA (red line) @ 1.3855.
Lurking nearby is the 61.8 retracement level @ 1.3804, so those two levels will be the ones to watch out for in any further downside move in cable.
Sterling sentiment has been rather weak following last week's poor run of data. That has seen bets for a May rate hike by the BOE cool off, and rightfully so.
BOE governor Carney has said that a rate hike will be conditional upon data points, and if last week's softer wage growth, inflation, and poor retail sales are any indication, the BOE is not going to raise rates in May after all.
The market expectation is more of a coin-toss right now - OIS market pricing in 51.0% probability of a rate hike - but the final nail in the coffin could come from Friday's Q1 GDP advanced reading. If the figure there is skewed towards the downside, expect calls for a May rate hike to be completely called off.
