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GBP/USD taking a hit of reality

FXStreet (Barcelona) - GBP/USD is trading at 1.6066, down -0.27% on the day, having posted a daily high at 1.6133 and low at 1.6011.

GBP/USD took a hit while the BoE minutes came off a little more dovish than perhaps widely anticipated and US CPI printed higher than forecast by 0.1% year on year and on the month. The MPC votes were still coming in at 7-2 with same names presenting a case for immediate hikes; Weale and McCafferty looking for a 25 basis point rate hike. However, the dovishness came around in respect of the widening of the output gap which is central to the MPC’s forward guidance notes and given the concerns of a slowdown of the global growth pact that has “increased the risks to the durability of the UK expansion in the medium term,”. Indications therefor are that a hike in rates may not come around as soon as the market was pricing in.

Recently we listened to Haldane echoing the sound of these minutes and tomorrow we will hear from Deputy Governor Broadbent. This event could offer some further insight to the timing of the first rate hike. On Friday we get the first print of the UK Q3 GDP. A miss on consensus, which is a possibility due to the poorer performances in contributing sectors, Sterling could be hit again before the close of the week.

GBP/USD noteworthy levels

With spot trading at 1.6067, we can see next resistance ahead at 1.6082 (Hourly 20 EMA), 1.6085 (Daily Classic S1), 1.6104 (Hourly 100 SMA), 1.6110 (Yesterday's Low) and 1.6113 (Daily Open). Support below can be found at 1.6059 (Daily Classic S2), 1.6058 (Hourly 200 SMA), 1.6032 (Weekly Classic PP), 1.6019 (Weekly Low) and 1.6011 (Daily Low).

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