What has actually changed for the sterling to start the week under selling pressure? The sterling was able to hold its ground last week due to a better that expected GDP numbers and a 8-1 vote not to cut rates by the MPC.
Fundamentally, nothing has changed much. It appears that traders will be waiting for the PMI Manufacturing and Services reports coming out this week to shed further light on the underlying economic strength.
Technically, the unexpected move last Friday has largely jeopardised the bull run which put the sterling as high as 1.7554. Present technical charts on both H1 and H4 automatically warn about the trend reversal. If the sterling could not hold above the important 1.7400 level at closing today or tomorrow, we could have a false bull breakout on the daily chart.
Personally, I am quite positive to buy into weakness as the important 1.7400 was being probed. In fact, I am already long again on the sterling at 1.7403, hoping that the real economics will eventually take over.
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