Pound Holds as Brexit Talk Heats Up?
Today’s Spotlight Market
The British Pound has remained steady over recent sessions, even as the Brexit heats up among UK lawmakers. The Bank of England warned that a vote to exit the European Union could damage the British economy, possibly triggering a recession. In addition to the BOE?s warning, almost 200 economists signed a letter in the London Times newspaper opposing an exit from the EU. The list included some UK heavyweights, including ex-BOE members.
Fundamentals
The BOE had decided to keep rates steady in a unanimous vote, but the central bank also recently slashed its growth forecast for the second quarter. The latest inflation report also indicated that economic growth would increase in the second half of the year. The BOE is targeting 0.9% inflation for the year, which gives the bank plenty of wiggle room to stimulate the economy. Economic data has been fairly soft of late, which could lead to further action from the BOE down the road. This, coupled with the Brexit fears, suggests that the danger to the Pound seems to be to the downside.
Technical Notes? -? View Today’s Chart
Turning to chart, we see the June Pound failing to breakout and staying within the 1.4000-1.4750 trading range. This suggests that the market could remain range-bound for the foreseeable future. The RSI recovered from overbought levels after the recent sell-off, and the indicator is now at neutral levels. Prices are trading just above the 50-day moving average, which has acted as support in recent sessions.
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