GBP/USD hits fresh post-Brexit referendum high at 1.4354

Pound jumps to 1.4354 - the highest level since June 2016 Brexit referendum vote.
Higher UK wages would embolden hawks at the BOE, could yield another leg higher in Sterling.

Omkar Godbole FXStreet Contributor

There is no stopping the GBP/USD freight train. The currency pair rose to 1.4354 in Asia - the highest level since June 2016

The surge is being associated with a higher UK rates outlook and lower Brexit-related anxiety. BOEWATCH on Eikon is pricing a 74% chance of a hike at May meeting and a total of 37.15 bps of rate increases by this year's Dec 20 meeting, according to Reuters.

The rate hike odds would improve further if the UK wage growth number, due at 08:30 GMT, beats estimates. In this scenario, Cable could challenge 1.4548 (50 percent Fibonacci retracement of 2.14 high - 2016 low). Meanwhile, a weaker-than-expected number may yield a pullback to the ascending (bullish biased) 5-day moving average (MA) lined up at 1.4264. Also, GBP rally could fizzle out if the trade talks (to decided Britain's relationship with the EU post-Brexit) hit a deadlock.

GBP/USD Technical Levels

A daily close above 1.4345 (January 2018 high) would open up upside towards 1.44 (psychological level) and 1.4422 (descending 50-month MA). On the downside, a break below 1.4318 (support on hourly chart) would allow a deeper pullback to 1.4277 (50-hour MA) and 1.4236 (100-hour MA).

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

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