We slipped below the 1.20 level in Cable at the beginning of July and have traded the majority of the month below this level – pls see chart. As you can see from the chart below the market has found it very hard to trade back above this 1.2090-1.2100 level, which has become decent resistance on the topside. The faith of the Sterling has been in the hands of the Dollar for most of this year, as the Dollar rallied against all G10 currencies. Of late we have had a number of positive economic signs out of the UK – for example, the PMI releases last Friday, which were markedly better than those out of the US and Europe – this has helped the Sterling moderately, however, its real faith will boil down to the Federal Reserve Interest Rate Decision this evening in the US at 7.00 pm London time. The market has priced in a 75 bps increase to interest rates and a hawkish press conference at 7.30 pm to follow. Any deviation from this should give Sterling a boast and help establish it firmly above the 1.2100 level.
GBP/USD has been trading below the 1.20 level for the majority of July and coming up against resistance at 1.2190-1.2100 – see red