Pound falls to a fresh low of the day as the US dollar climbs

The pound is flirting with the lows of the day and the lows of the month as the US dollar broadly strengthens.

This four-hour chart is looking like a head-and-shoulders that would target 1.23 or at least the November lows.

The Bank of England vote today was more-dovish than anticipated but the market is still only pricing in 54 bps in easing next year. I think the UK CPI reports in the months ahead will be some of the most market-moving of any global economic data released next year. There is a real concern about inflation at the BOE but if that fades, then they have lots of room to cut, and fast.

The latest move though is mostly about the dollar as it strengthens due to middling bounce back from risk assets. The dollar is also getting heavy bids via USD/JPY which is absolutely soaring today after the BOJ left rates on hold.

This article was written by Adam Button at www.forexlive.com.