GBP/USD slowed the rally at the beginning of the new week after having hit at 5.5-year high of $1.7060 on June 19. The cable slipped below the $1.7000 mark on Tuesday, disappointed by the BoE inflation report hearings. Contrary to the «hawkish» market expectations, the BoE Governor Carney only stressed that the rate cuts will be gradual and data-dependent. He also admitted that the wage growth remains sluggish. The inflation hearings showed that the BoE members are still quite indeterminate regarding the future of the monetary policy.
Cable’s decline found support at $1.6915 and recovered some pips higher. We maintain our bullish view for the pair as long as the $1.6900 area holds. This is the support of the October 2013 bullish channel. Fix above the $1.7000 mark would be a good signal to buy with a target of $1.7040. The $1.7040/60 area is seen strongly resistive. If the market overcomes it, the way to $1.7300 will open. Fall below $1.6700 would negate the bullish outlook.
Watch the US CB Consumer Confidence and the New Home Sales in the American session.