GBPUSD jumps as BoE Forbes dissents
FOREX.com March 16, 2017 4:24 AM
The GBP/USD has hit a fresh post-FOMC high this afternoon. Like the Bank of Japan and Swiss National Bank, the Bank of England decided to keep its monetary policy unchanged. BUT it wasn't a unanimous decision as Kristin Forbes voted for a 25 basis point rise amid concerns over inflation. This caused the pound to jump across the board.
The GBP/USD has hit a fresh post-FOMC high this afternoon. Like the Bank of Japan and Swiss National Bank, the Bank of England decided to keep its monetary policy unchanged. BUT it wasn't a unanimous decision as Kristin Forbes voted for a 25 basis point rise amid concerns over inflation. This caused the pound to jump across the board. Meanwhile, the Queen has given the go ahead for Prime Minister Theresa May to trigger Brexit Article 50. This was expected and thus didn’t cause the currency to weaken. But with the UK set to start the process of leaving the EU in the coming days, and Scotland potentially on the verge of holding a second independence referendum, uncertainty remains high which could limit the gains for the pound. That being said, much of the negativity is already priced in. Thus, unless economic data deteriorates significantly now, sterling may well be on the verge of a notable comeback.
Indeed, as we reported the possibility on Wednesday, the GBP/USD has in fact staged a relief rally as it heled that key support in the 1.2140-80 area. The clue was there with the cable creating lots false breakouts in recent months, trapping traders in one direction before going the other. The most two obvious examples of this can easily be seen on the chart around 1.20 in mid-January (when sellers were trapped) and around 1.27 in February (when buyers were trapped). Another such trap was set for the sellers on Tuesday when the cable momentarily broke below the 1.2140 support level before bouncing back sharply. Since then, the GBP/USD has broken several resistance levels, including the 1.2245-65 range today. If this level holds as support now then we may see a move back towards the upper end of the wider range again. In the more immediate outlook, there is potential resistance around 1.2375-1.2405 area. This range was previously resistance. If the cable doesn’t turn here then the next bullish objective would be around 1.2545-1.2580.
Source: eSignal and FOREX.com
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.