 Sterling's response to BoE rate hike has been somewhat ambivalent. Despite BoE's openness to further tightening and a rosier economic outlook, forecast for inflation indicates a marked downturn, with a "material" undershooting expected in the forecast horizon. The voting pattern held no surprises, leaving the Pound now turning its attention to tomorrow's GDP data for potential directional cues. In the broader currency market, Japanese Yen is seeing notable gains in early US session, buoyed by continued decline in US and European treasury yields. Dollar, meanwhile, is capitalizing on risk-off sentiment, as US futures hint at a slightly lower opening. Australian dollar is trailing for the day, with Canadian Dollar and Euro not far behind. However, the final standing will depend on how risk sentiment evolves throughout the remainder of the session. From a technical standpoint, the spotlight now shifts to whether AUD/USD will break 0.6716 support level, indicating rejection by 0.6804 resistance level. If this occurs, it suggests that the consolidation pattern from 0.6563 may have peaked at 0.6817, paving the way for a resumption of larger decline from 0.7156. If this turns out to be the case, it could signal a reversal in commodity currencies as well as risk sentiment. |
