Thursday is a big day for the GBP against all the other major pairs soon as the Bank of England is expected to lift interest rates for the first time since 2017 to 0.75% (0.50% exp). However, the market I believe is already priced in and traders should be weary of what's to come, as I feel for things are still very uncertain. While many have been talking up Carney being upbeat on Bloomberg recently, UK data has been lacklustre and the fact of the matter is that Brexit poses a real trade threat to the economy in the long run, with the potential to do a large amount of economic damage if there were to be a hard Brexit. So markets will expect the rate rise, but they will mostly be interested in the wording and questions that is used after, to really gauge the economy and how they expect it to move in the long run. There is certainly the potentially for a quick blip and a brief sell-off if the wording is more dovish than expected and I do feel that Carney will have to highlight the Brexit risk that is at hand.
For me the GBPUSD will be the prime candidate when it comes to movements. So far the market has priced in the interest rate and will be focused on the wording. Couple this with the fact that FOMC is likely be hawkish based on recent economic data and it's clear to see that things could be bearish for the GBPUSD. With that in mind the rejection of resistance at 1.3171 makes a lot of sense as the market is nervous here and each wave higher has so far been weaker on the daily chart. Traders will be focused on support levels now, with support at 1.3069 likely to be the first to be tested by the bears. Further on from that and 1.2958 and 1.2798 are likely to also be tested sharply if things are dovish from the Bank of England. If the GBPUSD does however swing to the upside then the 50 day moving average could act as technical resistance in this market.
The other major mover today has been gold which has come under some serious pressure yet again. At present it seems that with a stronger USD commodities have taken a beating, and that bearish pressure is still lingering in markets.
Despite the falls support has been very strong at 1213, which is looking like the land in the sand for the bears and where the bulls seem to be taking control. If things can be turned around here then a push upwards to resistance at 1240 and 1258 are likely on the cards. One thing to watch for though will be FOMC which could cause some serious volatility and of course the upcoming non-farm payroll, but for now the 1213 is the key level to watch here.