The BoE decision may influence the British pound. The regulator may raise the key interest rate to 0.50% from 0.25%. In December, when the Bank of England hiked the benchmark rate to 0.25% from 0.10%, the pound sterling showed a long and considerable increase.
Today, the situation may repeat. In this case, the British currency is likely to climb during the whole month. Notably, in December, the regulator’s decision surprised market participants, thus causing such an impressive advance. This time, such a step by the BoE is quite expectable. That is why the British pound will hardly react strongly, though it will still rise.
The British currency has added 220 pips for the last four days, thus approaching the resistance level of 1.3600. Such a jump could be explained by traders’ interest in speculative operations amid a flow of information. On the four-hour chart, the RSI technical indicator touched zone 70, signaling that the pound sterling has reached overbought levels.
Meanwhile, the Alligator indicator points to a change in moving averages to the upward from the downward. On the daily chart, we see that moving averages are crossing each other, reflecting a slowdown in the downward movement.
Earlier, on the daily chart, we noticed a signal about a gradual recovery in the bearish interest. Since the correction is longer than expected, the signal could be false if the price consolidates above 1.3600.
Outlook
Under the current conditions, long positions are overheated. The level of 1.3600 may act as resistance. This may contribute to a gradual recovery in the bearish interest. Notably, traders may ignore the overbought conditions ahead of important events. In this case, the price consolidation above 1.3600 may lead to a further rise.
In terms of the complex indicator analysis, technical indicators signal long opportunities on the short-term and intraday periods amid the corrective movement. In the mid-term period, we see mixed signals.
