Yesterday the Cable strengthened awaiting the Fed's decision
The pound continued to rise up to the Fed's decision. The release appeared moderately optimistic. The regulator noted the economic growth and confirmed that the rate decision will be taken in accordance with the following parameters. We didn’t see any hint of external or internal risks.
The US fundamental data also pleased yesterday
The ADP non-farm employment change significantly exceeded the forecast: 246K vs. 165K and 151K in December. Later, the ISM Manufacturing PMI showed an excellent growth from 54.5 to 56.0 against the forecast of 55.0.
Fed formally remains neutral, the government will be able to start infrastructure projects only when the new budget will be agreed. However, don’t forget that in March we will a fight with Congress on the issue of raising the debt limit.
Today the Bank of England will announce its decision on monetary policy, but after the "neutral" position of the Fed, any changes aren’t expected. In Britain, the Construction PMI is expected to decrease from 54.2 to 53.9 in January, that the market is likely to ignore it.
The US weekly jobless claims may be reduced from 259K to 250K, the unit labor costs are expected to increase from 0.9% to 1.9%.
How to trade binary?
The short-term downward movement is possible in the range of 1.2595 - 1.2555. The upward movement is possible after the break of 1.2685.
We would buy Call options if the price goes above 1.2685. This scenario would be invalidated if the pair goes below 1.2595, in which case we would go for Put option with the end of the expiry.
Target price: 1.2685
Expiry time: 21:00 GMT