- Lloyds Bank
A combination of a dovish Fed and hawkish Mark Carney is a perfect combination for a solid rally on the cable. On Friday, the pair was trading around 1.7055, following its almost six-year high at 1.7063 that was hit a session earlier. While some technicals are pointing market is overbought already and the pair needs to take a pause, Lloyds Bank sees 1.7330 as a medium term target for the cable, while the nearest resistance can be found at 1.7120. From the side of technical analysis, weekly R1 and a Bollinger Band at 1.7073/66 can be mentioned.
Last Thursday one of the BoE members, Ian McCafferty added fuel to the fire and provided additional boost for the Sterling, by saying a hike in interest rates will depend on how the economy performs over the summer and autumn. He also claimed unemployment rate was significantly higher than its medium-term natural level, meaning, there is still a room for further improvement. At the same time, McCafferty pointed out that Britain's economy had come a long way in the last 12-18 months, with economic output coming back to its pre-recession levels. Markets now already pricing in a potential sooner-than-expected rate hike, and according to both McCafferty and Charlie Bean, rate can settle at around 2.5-3%. Keeping it all in mind, each fundamental report in the coming months will have stronger impact on the Sterling.
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