GBPUSD [2HR – 08/22/2014]. Chart created using FXCM Marketscope
Fundamental Forecast for Pound:Neutral
- GBP/USD Surges Above 1.6650 As BOE Voted 7-2 To Leave Rate Unchanged
- GBP/USD Breaks Below 200 Day Moving Average
- For Real-Time Updates and Potential Trade Setups on the British Pound, sign up for DailyFX on Demand
The GBP/USD slipped to a fresh monthly low of 1.6560 even as the Bank of England (BoE) Minutes showed Martin Weale and Ian McCafferty voting for a 25bp rate hike at the August 7 meeting, but we may see the British Pound regain its footing ahead of the next interest rate decision on September 4 should the fundamental developments coming out of the U.K. further boost interest rate expectations.
Even though the BoE anticipates the strength in the British Pound to dampen the risk for inflation, the ongoing improvement in the labor market may continue to boost the scope for stronger wage growth in the U.K., and it seems as though the Monetary Policy Committee (MPC) will do little to halt a further appreciation in the sterling as it helps to deliver price stability.
With that said, a further expansion in private-sector lending along with a pickup in household confidence may generate an improved outlook for the U.K. economy, and a slew of positive developments may put increased pressure on the BoE to normalize monetary policy sooner rather than later as the central bank anticipates a stronger recovery in the second-half of 2014. Credit Suisse Overnight Index Swaps are current pricing a 40bp rise in the benchmark interest rate over the next 12-months, and it seems as though we would need a further pickup in price growth to boost rate expectations as the headline reading for U.K. inflation cools to an annualized 1.6% from 1.9% in June.
Nevertheless, the technical outlook continues to highlight a risk for a further decline in the GBP/USD as the Relative Strength Index (RSI) pushes deeper into negative territory, and the descending channel carried over from the previous month may continue to take shape over the near-term as the BoE softs its hawkish tone for monetary policy.
ForexAmid the rising economic power of India, the talks of making the Indian currency fully convertible are gaining momentum. We look at the pros and cons.
Forex FundamentalsAs the world's second largest economy, China's challenge to America’s dominance includes a push to make the yuan (RMB), the world’s reserve currency. Whether it can do that now is unclear.
EconomicsOne particular barrier to trade that has received much attention of late and caused delays in negotiations of the TPP is exchange-rate manipulation, by which a country artificially devalues its ...
ForexBreaking news moves forex markets. Here are the top U.S. sites for tracking forex news.
InvestingAccess to financial information has grown with the expansion of digital news. Bloomberg and Thomson Reuters lead the pack, claiming a majority of the business information market.
EconomicsSouth Korea is the latest country to cut interest rates in an attempt to stimulate economic growth.
Forex EducationPeer-to-peer (P2P) currency exchange networks offer a viable and cheaper alternative for buying and selling currencies.
ForexHere is a simple breakdown of how to open an offshore forex account for US-based users, including legal requirements.
EntrepreneurshipA brief overview of the top apps that help forex traders with on time information, charts and more.
Investing BasicsVirtual currency is probably here to stay, but what about Bitcoin specifically? Does it have a first-to-market advantage? What are the risks involved?
- No results found.