The pair is down 0.5% to 1.1330 levels on the day, as the dollar is staying hot in the post-Fed reaction. After several attempts by buyers to get above the 100-hour moving average (red line) and failed, sellers are now in near-term control and the latest drop could very well spell out a push towards 1.1200 next – if you go by the charts.
The failure to keep a break above 1.1500 and to eventry and contest the 100-day moving average just above 1.1700 is a blow for buyers but that perhaps is a testament to the prevailing sentiment in the pair over the past ten months.
The path of least resistance continues to dictate for a move lower and the BOE could very well cement that if they only raise the bank rate by 50 bps today and fail to offer any hawkish direction about the upcoming decisions. That will indeed be a stark contrast to the Fed and as outlined before:
“Considering that both central banks (Fed and BOE) already gave a formal message that we are in the second-half of the tightening cycle, the trade for cable is very much a case of ‘who folds first’? The Fed or the BOE? In this instance, it looks very much like the latter. As such, the path of least resistance is for the pair to move lower – all else being equal.”