Sterling Resumes Down Trend After Boe Inspired Selloff
ActionForex | Nov 13, 2014 02:09AM ET
Sterling is now the second weakest currency next to Japanese yen after the post BoE inflation report selloff. Markets are expecting BoE to start raising interest rate from the record low of 0.50% in late 2015. And the pace of tightening after that would be slow. Rate might reach 2% level by the end of 2017. And that's subject to the negative impact from stagnation in Eurozone. BoE governor Mark Carney noted that "developments in the world economy mean some of the downside risks to growth in earlier projections have crystallized." And, "a specter is now haunting Europe - the specter of economic stagnation."
GBP/USD took out recent support at 1.5789 to resume the larger decline from 1.7190. Focus in EUR/GBP is back on 0.7911 minor resistance while focus on GBP/JPY is back on 181.07 support. GBP/CAD's recovery from 1.7535 might have completed at 1.8287 already and bias is back to the downside for 1.7535 support. Overall, the consolidation pattern from 1.8666 is still in progress and would likely extend lower to 38.2% retracement of 1.5242 to 1.8666 at 1.7358 before completion.
In Eurozone, ECB president Mario Draghi said that the central bank would "further unconventional policy actions should medium-term inflation expectations worsen or if the measures already decided on prove to be insufficient". And, he emphasized that "both demand- and supply-side policies are necessary". Meanwhile, Bundesbank chief Jens Weidmann talked down the prospect of large-scale sovereign bonds purchases. He noted that "as well as the legal limits, the buying of state bonds would create wrong incentives, in particular encouraging indebtedness of euro zone countries."
On the data front, New Zealand Business NZ manufacturing index rose to 59.3 in October. Australian consumer inflation expectation rose 4.1% in November. Japan machine orders rose 2.9% mom in September. UK RICS house price balance dropped to 20 in October. A bunch of China data would be released today which might trigger volatility in Aussie and Kiwi. From Europe, ECB will release monthly bulletin. German will release CPI final and Swiss will release PPI. Later in the day, Canada will release new housing price index while US will release jobless claims.
Get The News You Want
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.