Back
12 Sep 2013
GBP/USD skyrockets on more hawkish BoE
FXstreet.com (Athens)- The GBP/USD climbed well above the 1.5800 area, as Carney proved himself more hawkish than usual on his earlier statement.
GBP/USD soars on pound traders treating Carney guidance on inflation as reason to buy “cable”
The GBP/USD was initially boosted by traders considering that it would be a great opportunity to take long positions on cable treating Carney guidance on inflation. Therefore, the “cable” climbed above the 1.5800 area, before Carney’s comments proved to be even more hawkish than expected. Carney reported to say that “because 35% of unemployed are long term unemployed, they keep a 6.5% medium-term unemployment target, and not a natural 5%,”, as well as that “for better transparency new MPC members must declare if they are operating under current forward guidance their own policy.” What’s more, Carney reported to say to Parliament that “BoE policy is now more effective, which you could call loosening,” and that “he supported and inflation knockout and it helps anchor inflation expectations.” Fisher and Miles also mentioned that “inflation 2.5% knockout will cause the BoE to reconsider policy if inflation is way off target,” and that “market reaction to better GDP may prove transitory,” respectively.
Technical Outlook on GBP/USD
The cable spiked on 1.5820 just a few minutes ago on Carney’s acceptance that policy is now by far more stimulated. While that raises some issues of whether inflation target is more or less compromised, the “cable” is not far away from the previous high as of 1.5842 in February of 2013. The pair is trading now at 1.5818, up 0.01%. According to Karen Jones, Head Technical Analyst of Commerzbank, “Above 1.5830 would introduce scope to 1.6036, the 78.6% retracement of the move down from December 2012, which is expected to hold and provoke failure.” Daily pivot point support can be found at 1.5658, 1.5616, 1.5577, and resistance at 1.5812, 1.5863 and 1.5921, respectively.
GBP/USD soars on pound traders treating Carney guidance on inflation as reason to buy “cable”
The GBP/USD was initially boosted by traders considering that it would be a great opportunity to take long positions on cable treating Carney guidance on inflation. Therefore, the “cable” climbed above the 1.5800 area, before Carney’s comments proved to be even more hawkish than expected. Carney reported to say that “because 35% of unemployed are long term unemployed, they keep a 6.5% medium-term unemployment target, and not a natural 5%,”, as well as that “for better transparency new MPC members must declare if they are operating under current forward guidance their own policy.” What’s more, Carney reported to say to Parliament that “BoE policy is now more effective, which you could call loosening,” and that “he supported and inflation knockout and it helps anchor inflation expectations.” Fisher and Miles also mentioned that “inflation 2.5% knockout will cause the BoE to reconsider policy if inflation is way off target,” and that “market reaction to better GDP may prove transitory,” respectively.
Technical Outlook on GBP/USD
The cable spiked on 1.5820 just a few minutes ago on Carney’s acceptance that policy is now by far more stimulated. While that raises some issues of whether inflation target is more or less compromised, the “cable” is not far away from the previous high as of 1.5842 in February of 2013. The pair is trading now at 1.5818, up 0.01%. According to Karen Jones, Head Technical Analyst of Commerzbank, “Above 1.5830 would introduce scope to 1.6036, the 78.6% retracement of the move down from December 2012, which is expected to hold and provoke failure.” Daily pivot point support can be found at 1.5658, 1.5616, 1.5577, and resistance at 1.5812, 1.5863 and 1.5921, respectively.