GBP/USD: Pound Keeps Rolling After Positive BOE Report
Kenny Fisher | Nov 29, 2013 12:30AM ET
The British pound continues to post more gains against the US dollar on Thursday, as GBP/USD trades in the mid-1.63 range. The pound has been red-hot, gaining over 400 points since mid-November. The pound got a boost from the BOE Financial Stability Report, which said that the economic recovery was getting stronger. There are no US releases on Thursday, as the markets are closed for the Thanksgiving holiday.
GBP/USD hit its highest levels since January, following an upbeat Financial Stability report from the BOE on Wednesday. The Bank stated that risks to financial stability had lessened as economic growth appears to be improving. At the same time, the BOE warned that a sharp rise in interest rates could threaten financial stability. This message is similar to what we heard from Governor Mark Carney when he testified before a parliamentary committee earlier this week. Carney sought to dampen growing expectations of an interest hike, saying that economy still has plenty of slack and that the BOE might hold off on a rate hike even if unemployment fell below the 7% level. The British economy continues to pick up steam, as underscored by Second Estimate GDP, which posted a healthy gain of 0.8% in Q3.
Over in the US, employment numbers continue to look good. For a second straight week, Unemployment Claims came in lower than market expectations, and this has helped the dollar post strong gains against the retreating yen. With increasing speculation about a QE taper, employment releases will remain under the market microscope. If employment numbers continue to improve, we can expect the Fed to scale down QE early in 2014, which would likely give a big boost to the US dollar.
GBP/USD November 28 at 16:00 GMT
GBP/USD 1.6344 H: 1.6358 L: 1.6278
- GBP/USD continues to climb in Thursday trading. The pair crossed above the 1.63 line during the Asian session and has continued to gain ground.
- 1.6300 is providing support as the pair moves higher. This is not a strong line and could face pressure if the pound gives up some gains. This is followed by support at 1.6231.
- On the upside, the pair faces resistance at 1.6476. This is followed by resistance at the round number of 1.6600, which has remained intact since August 2011.
- Current range: 1.6231 to 1.6300
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Further levels in both directions:
- Below: 1.6300, 1.6231, 1.6125, 1.6000 and 1.5877
- Above: 1.6476, 1.6600, 1.6696 and 1.6744
OANDA's Open Positions Ratio
GBP/USD ratio is pointing to gains in long positions in Thursday trading. This is reflected in the pair's current movement, as the pound continues to post gains against the US dollar. Short positions continue to dominate the ratio, reflecting a trader bias towards the US dollar posting gains against the pound.
The pound continues to move upwards and has again pushed into 1.63 territory. With the US markets closed on Thursday, we could see the pair settle down during the North American session.
GBP/USD Fundamentals
- 10:00 Bank of England Financial Stability Report.
- 10:00 Bank of England Governor Mark Carney Speaks.
- 10:33 British 30-year Bond Auction. Actual 3.61%.
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