50% midpoint is at 1.36224
The GBPUSD is lower on the day after up and down price action. The pair is down making a new session low and in the process is testing the 50% midpoint of the move up from swing low reached at the end of September. That level comes in at 1.36224. Earlier today, the price tested the level and saw a bounce back higher.
Are the sellers able to push below the midpoint level now on the second look?
A move below the midpoint would next target the swing low going back to September 22 at 1.3608 and the swing low going back to October 13 at 1.35867. The 61.8% retracement of the move up comes in at 1.35725.
The Bank of England will announce a rate decision on Thursday. Inflation is running hot near 5%. Bank of England Gov. Bailey has chatted about the need to act to contain inflation expectations. Two other members on the monetary policy committee have expressed similar concerns. However, there is uncertainty from at least four other members who can go either way. Will the Bank of England join the RBNZ with a tightening of rates? The decision is on a knifes edge.
Typically, a tightening central bank should support the currency. That might argue for dip buyers. However, also on the schedule is the Fed decision on Wednesday. The Fed is expected to start to taper process ($15 billion of the $120B per month purchases?). That pace would end QE by the middle of next year. Will that amount be larger (say $20B) and in doing so look to end QE in 6 months?
That uncertainty is also in play as central banks become the focus in the short term.
All argues for paying attention to levels and being disciplined if wrong. Also understand that risk is elevated which argues for being more cautious.
