🏄 Grow your portfolio even on vacation with InvestingPro | Summer Sale 50% OFFCLAIM SALE

Bearish GBP/USD Outlook Favored On Dovish BoE, U.K. CPI In Focus

Published 11/16/2014, 02:23 AM

GBP/USD Daily Chart

Fundamental Forecast for Pound:Bearish

  • GBP/USD Continuation, EUR/GBP ST Triangle in Play after BoE Inflation Report
  • Cable at New Lows for 2014, but Key Support Awaits

The Bank of England (BoE) Minutes are widely expected to show another 7-2 split within the Monetary Policy Committee (MPC) as the majority retains a wait-and-see approach, and the policy meeting minutes may do little to increase the appeal of the British Pound as the central bank curbs its growth and inflation forecast.

Even though the BoE remains on course to raise the benchmark interest rate in 2015, the downward revisions delivered in the quarterly inflation report favors a bearish outlook for GBP/USD as Governor Mark Carney adopts a more dovish tone for monetary policy and warns of the ‘large disinflation pressures’ coming from abroad. With that said, easing interest rate expectations is likely produce further headwinds for the sterling, but positive data prints coming out of the U.K. may generate a near-term correction in GBP/USD as the central bank sees the economy returning to normal.

As a result, a rebound in the U.K’s core Consumer Price Index (CPI) along with a marked pickup in Retail Sales may spur a bullish reaction in GBP/USD, but we will for an extension of the series of lower highs & lows in the exchange rate as it retains the bearish trend dating back to July.

In turn, we will retain the approach to sell-bounces in GBP/USD and watch former support around the 1.5890-1.5900 for new resistance, with the next downside region of interest coming in around 1.5540-50, the 78.6% Fibonacci retracement from the August 2013 low.

3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads.

Original post

Which stock should you buy in your very next trade?

AI computing powers are changing the stock market. Investing.com's ProPicks AI includes 6 winning stock portfolios chosen by our advanced AI. In 2024 alone, ProPicks AI identified 2 stocks that surged over 150%, 4 additional stocks that leaped over 30%, and 3 more that climbed over 25%. Which stock will be the next to soar?

Unlock ProPicks AI
Read Next

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2025 - Fusion Media Limited. All Rights Reserved.